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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 COMMISSION FILE NUMBER 1-12068
MASCOTECH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<C> <C>
DELAWARE 38-2513957
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
21001 VAN BORN ROAD, TAYLOR, MICHIGAN 48180
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 313-274-7405
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
<S> <C>
COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE, INC.
$1.20 CONVERTIBLE PREFERRED STOCK NEW YORK STOCK EXCHANGE, INC.
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003 NEW YORK STOCK EXCHANGE, INC.
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS, AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [X]
THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S COMMON STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT ON FEBRUARY 28, 1997 (BASED ON THE CLOSING SALE
PRICE OF $19 OF THE REGISTRANT'S COMMON STOCK ON THE NEW YORK STOCK EXCHANGE
COMPOSITE TAPE ON SUCH DATE) WAS APPROXIMATELY $489,375,000.
NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AT FEBRUARY 28,
1997:
37,123,000 SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE
PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT TO BE FILED FOR ITS 1997
ANNUAL MEETING OF STOCKHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III OF
THIS FORM 10-K.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
- ---- ----
<C> <S> <C>
PART I
1. Business.................................................... 2
2. Properties.................................................. 6
3. Legal Proceedings........................................... 7
4. Submission of Matters to a Vote of Security Holders......... 7
Supplementary Item. Executive Officers of Registrant........ 8
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters......................................... 9
6. Selected Financial Data..................................... 10
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 12
8. Financial Statements and Supplementary Data................. 17
9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.................................... 40
PART III
10. Directors and Executive Officers of the Registrant.......... 40
11. Executive Compensation...................................... 40
12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 40
13. Certain Relationships and Related Transactions.............. 40
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 41
Signatures.................................................. 45
FINANCIAL STATEMENT SCHEDULES
MascoTech, Inc. Financial Statement Schedule................ F-1
TriMas Corporation and Subsidiaries Consolidated Financial
Statements and Financial Statement Schedule................. F-3
</TABLE>
1
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PART I
ITEM 1. BUSINESS.
MascoTech, Inc. is a leading supplier of metalworked and aftermarket
products for the transportation industry. Sophisticated technology plays a
significant role in the Company's businesses and in the design, engineering and
manufacturing of many of its products. Products are manufactured utilizing a
variety of metalworking and other process technologies. Although published
industry statistics are not available, the Company believes that it is a leading
independent producer of many of the component parts that it produces using cold,
warm or hot forming processes.
MascoTech was incorporated under the laws of Delaware in 1984 as a
wholly-owned subsidiary of Masco Corporation, which in May, 1984 transferred to
MascoTech its industrial businesses. The Company became a separate public
company in July, 1984 when Masco Corporation distributed shares of Company
Common Stock as a special dividend to its stockholders. In late 1996, the
Company purchased from Masco Corporation 17 million shares of Company Common
Stock and warrants to acquire 10 million shares of Company Common Stock, thereby
reducing Masco Corporation's equity ownership from approximately 45 percent to
approximately 21 percent of the Company's outstanding Common Stock.
In June, 1993, the Company changed its name to MascoTech, Inc. from Masco
Industries, Inc. to reflect the significance of technology in the design,
engineering and manufacturing of many of the Company's products and services.
Except as the context otherwise indicates, the terms "MascoTech" and the
"Company" refer to MascoTech, Inc. and its consolidated subsidiaries.
During the last decade, MascoTech pursued diversified growth in the
transportation-related, architectural and defense markets. Structural changes in
recent years in the markets served by the Company, combined with the growth
opportunities and the capital requirements of certain of the Company's
Transportation-Related businesses, led the Company to an evaluation of the
prospects for all its businesses. This evaluation resulted in the Company's
strategic plan to focus on its core operating capabilities and divest certain
other businesses. The Company's engine and drivetrain group and aftermarket
group constitute the Company's core operating businesses.
In late 1994, the Company adopted a plan to dispose of its architectural
products, defense and certain of its Transportation-Related businesses. The
disposition of these businesses was completed in 1996. In addition, in 1996, the
Company disposed of its heavy-gauge stamping operations and in early 1997, the
Company completed the sale of its engineering and technical services businesses
to MSX International, Inc. As part of that transaction, the Company purchased an
approximate 45 percent common equity interest in MSX International, Inc. See
"Equity Investments -- Other Equity Investments," elsewhere in Item 1 of this
Report. The cash portion of the proceeds from the disposition of these
businesses has been applied to reduce the Company's indebtedness and to provide
capital to invest in its core businesses. The disposition of these businesses
did not meet the criteria for discontinued operations treatment for accounting
purposes; accordingly, the sales and results of operations of these businesses
are included in the results of continuing operations through the date of
disposition. Businesses held for sale or sold, including the engineering and
technical services businesses and the heavy-gauge stamping operations, had sales
of approximately $412 million in 1996. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Disposition of Non-Core
Businesses," included in Item 7 of this Report.
2
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INDUSTRY SEGMENTS
The following table sets forth for the three years ended December 31, 1996,
the net sales and operating profit (loss) for the Company's industry segments
(including businesses held for sale or sold).
<TABLE>
<CAPTION>
(IN THOUSANDS)
NET SALES
------------------------------------
1996 1995 1994(1)
---------- ---------- ----------
<S> <C> <C> <C>
Transportation-Related Products.......................... $1,151,000 $1,340,000 $1,332,000
Specialty Products:
Other Industrial....................................... 130,000 338,000 370,000
---------- ---------- ----------
$1,281,000 $1,678,000 $1,702,000
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
OPERATING PROFIT (LOSS)(2)
------------------------------------
1996(3) 1995(4) 1994(1)(5)
---------- ---------- ----------
<S> <C> <C> <C>
Transportation-Related Products.......................... $ 90,000 $ 144,000 $ (55,000)
Specialty Products:
Other Industrial....................................... 1,000 (3,000) (196,000)
---------- ---------- ----------
$ 91,000 $ 141,000 $ (251,000)
========== ========== ==========
</TABLE>
Net sales include the sales of businesses held for sale or sold, including
the engineering and technical services businesses and heavy-gauge stamping
operations, of approximately $412 million in 1996, $874 million in 1995 and $964
million in 1994. Additional financial information concerning the Company's
operations by industry segments as of and for the three years ended December 31,
1996 is set forth in the Note to the Company's Consolidated Financial Statements
captioned "Segment Information," included in Item 8 of this Report.
(1) Results exclude the energy segment which is treated as discontinued
operations. See the Note to the Company's Consolidated Financial Statements
captioned "Dispositions of Operations," included in Item 8 of this Report.
(2) Amounts are before general corporate expense.
(3) Includes a $32 million pre-tax loss principally from the sale of MascoTech
Stamping Technologies, Inc. This charge impacted the Company's
Transportation-Related Products industry segment.
(4) Includes $25 million in net gains resulting from sales of non-core
businesses. These net gains were substantially offset by reductions in the
estimated proceeds the Company expected to receive from businesses to be
sold, aggregating $12 million, and by certain exit costs incurred in 1995
aggregating approximately $8 million. The net gains (charge) impacts the
Company's industry segments as follows: Transportation-Related Products --
$21 million and Specialty Products -- $(2) million. The remaining $(14)
million of the net gains (charge) was allocated to General Corporate
Expense, which is not included above.
(5) Includes the impact of a pre-tax charge of $400 million for the disposition
of businesses. The charge impacts the Company's industry segments for 1994
as follows: Transportation-Related Products -- $196 million and Specialty
Products -- $191 million. The remaining $13 million of the charge was
allocated to General Corporate Expense, which is not included above.
The Company manufactures a broad range of semi-finished components,
subassemblies and assembled products for the original equipment and aftermarket
segments of the global transportation industry. Transportation-Related Products
represented approximately 90 percent of 1996 sales. The Company provides
components and products for which reliability, quality and certainty of supply
are major factors in customers' selection of suppliers.
The Company's Transportation-Related businesses manufacture engine,
drivetrain and aftermarket products. Engine and drivetrain products include
semi-finished transmission shafts, drive gears, engine
3
<PAGE> 5
connecting rods, wheel spindles and front wheel drive components. Aftermarket
products include fuel and emission systems components, windshield wiper blades,
constant-velocity joints, brake hardware repair kits and other automotive
accessories.
The Company's metalworked products are manufactured using various process
technologies, including cold, warm and hot forming, powdered metal forming,
value-added machining, tubular steel fabricating and hydroforming. Approximately
50 percent of the Company's 1996 sales of Transportation-Related Products
(including businesses held for disposition) resulted from sales of products made
using cold, warm or hot metal forming technologies. The Company believes that
its metalworking technologies provide cost-competitive, high-performance,
quality components required to meet the increasing demands of the automotive and
truck markets it serves.
Approximately 80 percent of the Company's Transportation-Related Products
sales in 1996 (including businesses held for disposition) were original
equipment automotive products and services. Sales to original equipment
manufacturers are made through factory sales personnel and independent sales
representatives. During 1996, sales to various divisions and subsidiaries of
Ford Motor Company, Chrysler Corporation, General Motors Corporation and New
Venture Gear, Inc. accounted for approximately 18 percent, 11 percent, 10
percent and 12 percent, respectively, of the Company's net sales (including
businesses held for disposition). Sales to the automotive aftermarket are made
primarily to distributors utilizing factory sales personnel. Aftermarket
products are sold to companies distributing into the traditional, retail and
heavy duty segments of the automotive aftermarket.
The disposition of the Company's Specialty Products businesses was complete
at December 31, 1996. Since the disposition of these businesses did not meet the
criteria for discontinued operations treatment for accounting purposes, sales
and results of operations for these businesses are included in the Company's
continuing operations through the dates of disposition.
GENERAL INFORMATION CONCERNING INDUSTRY SEGMENTS
No material portion of the Company's business is seasonal or has special
working capital requirements. The Company does not consider backlog orders to be
a material factor in its industry segments. Except as noted above under
"Industry Segments," no material portion of its business is dependent upon any
one customer or subject to renegotiation of profits or termination of contracts
at the election of the federal government. Compliance with federal, state and
local regulations relating to the discharge of materials into the environment,
or otherwise relating to the protection of the environment, is not expected to
result in material capital expenditures by the Company or to have a material
effect on the Company's earnings or competitive position. See, however, "Legal
Proceedings," included as Item 3 of this Report, for a discussion of certain
pending proceedings concerning environmental matters. In general, raw materials
required by the Company are obtainable from various sources and in the
quantities desired.
INTERNATIONAL OPERATIONS
The Company, through its subsidiaries, has businesses located in Germany,
Italy, England and the Czech Republic. Products manufactured by the Company
outside of the United States include forged automotive component parts and
constant-velocity joints. In early 1997, the Company acquired Neumeyer
Fliesspressen GmbH, a manufacturer of extruded products. See the Note to the
Company's Consolidated Financial Statements captioned "Segment Information,"
included in Item 8 of this Report for a discussion of the Company's foreign
operations and export sales.
The Company's foreign operations are subject to political, monetary,
economic and other risks attendant generally to international businesses. These
risks generally vary from country to country.
4
<PAGE> 6
EQUITY INVESTMENTS
TriMas Corporation
At December 31, 1996, the Company owned approximately 41 percent of the
outstanding common stock of TriMas Corporation ("TriMas"). See the Note to the
Company's Consolidated Financial Statements captioned "Equity and Other
Investments in Affiliates," included in Item 8 of this Report. TriMas is a
diversified proprietary products company with leadership positions in
commercial, industrial and consumer niche markets. TriMas manufactures a number
of industrial products, including standard and custom-designed ferrous,
non-ferrous and special alloy fasteners for the building construction, farm
implement, medium and heavy-duty truck, appliance, aerospace, electronics and
other industries. TriMas manufactures towing systems products, including vehicle
hitches, jacks, winches, couplers and related accessories for the passenger car,
light truck, recreational vehicle, marine, agricultural and industrial markets.
TriMas also manufactures: specialty container products, including industrial
container closures and dispensing products primarily for the chemical,
agricultural, refining, food, petrochemical and health care industries;
high-pressure seamless compressed gas cylinders primarily used for shipping,
storing and dispensing oxygen, nitrogen, argon and helium and a complete line of
low-pressure welded cylinders used to contain and dispense acetylene gas for the
welding and cutting industries; and specialty industrial gaskets for refining,
petrochemical and other industrial applications. In addition, TriMas
manufactures flame-retardant facings and jacketings used in conjunction with
fiberglass insulation, principally for commercial and industrial construction
applications, pressure-sensitive specialty tape products and a variety of
specialty precision tools such as center drills, cutters, end mills, reamers,
master gears, gages and punches. TriMas also provides metal treating services
for manufacturers of fasteners and comparable products.
Emco Limited
The Company owns convertible debentures, subordinated debentures and
approximately 43 percent of the outstanding common stock of Emco Limited
("Emco"), as a result of the transactions described in "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Corporate
Development," included in Item 7 of this Report. Emco is a Canadian-based
manufacturer and distributor of building and other industrial products,
including roofing materials, wood fiber products, sinks, and a distributor of
plumbing and related products. In addition, Emco manufactures custom components,
brass and aluminum forgings, plastic components, tools, dies and molds. The
Company has the option to transfer its holdings in Emco to Masco Corporation in
partial payment of the indebtedness due Masco Corporation as a result of the
transaction described in the Note to the Company's Consolidated Financial
Statements captioned "Shareholders' Equity," included in Item 8 of this Report.
Titan Wheel International, Inc.
The Company owns approximately 12 percent of the outstanding common stock
of Titan Wheel International, Inc. ("Titan"). See the Note to the Company's
Consolidated Financial Statements captioned "Equity and Other Investments in
Affiliates," included in Item 8 of this Report. Titan is a manufacturer of
wheels, tires and other products for agricultural, construction and other
off-highway equipment.
Other Equity Investments
In addition to its equity and other investments in the publicly traded
affiliates described in the preceding paragraphs, the Company owns approximately
45 percent of the outstanding common stock of MSX International, Inc., a
corporation formed in January, 1997 by an investor group consisting of the
Company, Citicorp Venture Capital and senior management of MSX International.
MSX International purchased the assets of the Company's engineering and
technical services businesses and the businesses of APX International which were
acquired by the Company in late 1996. MSX International provides engineering and
technical services primarily to the transportation industry in North and South
America, Europe and Asia. The Company also has investments in privately held
manufacturers of automotive components, including the Company's common equity
ownership interest in Delco Remy International, Inc., a manufacturer of
automotive electric motors and other components, and Saturn Electronics &
Engineering, Inc., a manufacturer of electromechanical and electronic automotive
components.
5
<PAGE> 7
PATENTS AND TRADEMARKS
The Company holds a number of patents, patent applications, licenses,
trademarks and trade names. The Company considers its patents, patent
applications, licenses, trademarks and trade names to be valuable, but does not
believe that there is any reasonable likelihood of a loss of such rights which
would have a material adverse effect on the Company's industry segments or on
its present business as a whole.
COMPETITION
The major domestic and foreign markets for the Company's products are
highly competitive. Competition is based primarily on price, product engineering
and performance, technology, quality and overall customer service, with the
relative importance of such factors varying among products. The Company's global
competitors include a large number of other well-established independent
manufacturers as well as certain customers who have their own internal
manufacturing capabilities. Although a number of companies of varying size
compete with the Company, no single competitor is in substantial competition
with the Company with respect to more than a few of its product lines and
services.
EMPLOYEES
The Company employs approximately 5,100 people after reflecting the sale of
the engineering and technical services businesses. Satisfactory relations have
generally prevailed between the Company and its employees.
ITEM 2. PROPERTIES.
The following list sets forth the location of the Company's principal
manufacturing facilities:
<TABLE>
<S> <C>
Florida........................ Deerfield Beach and Ocala
Indiana........................ Elkhart, Fort Wayne and North Vernon
Kentucky....................... Nicholasville
Michigan....................... Burton, Canton, Detroit, Farmington Hills, Fraser, Green Oak
Township, Hamburg, Holland, Livonia, Royal Oak, St. Clair,
Troy and Ypsilanti
Ohio........................... Bucyrus, Canal Fulton, Lima, Minerva and Port Clinton
Oklahoma....................... Tulsa
Pennsylvania................... Ridgway
Virginia....................... Duffield
Czech Republic................. Brno
England........................ Wolverhampton
Germany........................ Nurnberg and Zell am Harmersbach
Italy.......................... Poggio Rusco
</TABLE>
All of the Company's manufacturing facilities are primarily engaged in the
Company's Transportation -- Related Products operations. The Company's principal
manufacturing facilities range in size from approximately 10,000 square feet to
320,000 square feet, substantially all of which are owned by the Company and are
not subject to significant encumbrances. The Company's executive offices are
located in Taylor, Michigan, and are provided by Masco Corporation to the
Company under a corporate services agreement.
The Company's buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for current
requirements.
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<PAGE> 8
The following list sets forth the location of the manufacturing facilities
of TriMas and identifies the industry segments utilizing facilities in such
locations:
<TABLE>
<S> <C>
California...................................... Commerce (a)
Illinois........................................ Wood Dale (a)
Indiana......................................... Auburn (c), Elkhart (b), Frankfort (a), Goshen (b)
and Mongo (b)
Louisiana....................................... Baton Rouge (c)
Massachusetts................................... Plymouth (d)
Michigan........................................ Canton (b), Detroit (a) and Warren (d)
New Jersey...................................... Edison (d) and Netcong (d)
Ohio............................................ Lakewood (a)
Texas........................................... Beaumont (c), Houston (c) and Longview (c)
Wisconsin....................................... Mosinee (b)
Australia....................................... Hampton Park, Victoria (b) and Wakerley, Queensland
(b)
Canada.......................................... Fort Erie, Ontario (c), Oakville, Ontario (b) and
Sarnia, Ontario (c)
England......................................... Leicester (c)
Germany......................................... Neunkirchen (c)
Mexico.......................................... Mexico City (c)
</TABLE>
Industry segments in the preceding table are identified as follows: (a)
Specialty Fasteners, (b) Towing Systems, (c) Specialty Container
Products, and (d) Corporate Companies.
TriMas' buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for current
requirements.
ITEM 3. LEGAL PROCEEDINGS.
A civil suit was filed in the United States District Court for the Central
District of California in April, 1983 by the United States of America and the
State of California against over 30 defendants, including the Company's NI
Industries, Inc. subsidiary ("NI"), for alleged release into the environment of
hazardous waste disposed of at the Stringfellow Disposal Site in California. The
plaintiffs have requested, among other things, that the defendants clean up the
contamination at that site. A consent decree has been entered into by the
plaintiffs and the defendants, including NI, providing that the consenting
parties perform partial remediation at the site. Another civil suit was filed in
the United States District Court for the Central District of California in
December, 1988 by the United States of America and the State of California
against more than 180 defendants, including NI, for alleged release into the
environment of hazardous waste disposed of at the Operating Industries, Inc.
site in California. This site served for many years as a depository for
municipal and industrial waste. The plaintiffs have requested, among other
things, that the defendants clean up the contamination at that site. Two partial
consent decrees have been entered into by the plaintiffs and a group of the
defendants, including NI, providing that the consenting parties perform certain
interim remedial work at the site and reimburse the plaintiffs for certain past
costs incurred by the plaintiffs at the site. Based upon its present knowledge
and subject to future legal and factual developments, the Company does not
believe that any of this litigation will have a material adverse effect on its
consolidated financial position, results of operations or cash flow.
The Company is subject to other claims and litigation in the ordinary
course of its business, but does not believe that any such claim or litigation
will have a material adverse effect on its consolidated financial position,
results of operations or cash flow.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
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SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF REGISTRANT (PURSUANT TO INSTRUCTION 3
TO ITEM 401(B) OF REGULATION S-K).
<TABLE>
<CAPTION>
OFFICER
NAME POSITION AGE SINCE
---- -------- --- -------
<S> <C> <C> <C>
Richard A. Manoogian................... Chairman of the Board and Chief Executive
Officer 60 1984
Lee M. Gardner......................... President and Chief Operating Officer 50 1992
Timothy Wadhams........................ Vice President -- Controller and Treasurer 48 1984
</TABLE>
Each of the executive officers is elected to a term of one year or less and
serves at the discretion of the Board of Directors. Mr. Manoogian has served for
more than five years as Director, Chairman of the Board and the Chief Executive
Officer of Masco Corporation, an affiliate of the Company that is a manufacturer
of home improvement and building products. Mr. Manoogian is also a Director and
Chairman of the Board of TriMas Corporation.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is traded on the New York Stock Exchange
("NYSE") under the symbol "MSX." The following table sets forth for the periods
indicated the high and low sale prices of the Company's Common Stock as reported
on the NYSE Composite Tape and Common Stock dividends declared for the periods
indicated:
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW DECLARED
------------ ------------ ---------
<S> <C> <C> <C>
1995
First Quarter............................................. $13 1/2 $11 3/8 $ *
Second Quarter............................................ $12 7/8 $10 1/2 .03
Third Quarter............................................. $13 3/4 $11 1/4 .04
Fourth Quarter............................................ $12 1/2 $10 .04
----
$.11
====
<CAPTION>
DIVIDENDS
HIGH LOW DECLARED
------------ ------------ ---------
<S> <C> <C> <C>
1996
First Quarter............................................. $13 5/8 $10 3/8 $.04
Second Quarter............................................ $16 1/8 $12 1/2 .04
Third Quarter............................................. $15 1/2 $13 .05
Fourth Quarter............................................ $17 $13 1/2 .05
----
$.18
====
</TABLE>
* Prior to the First Quarter of 1995, dividends were paid in the quarter
following declaration. Thereafter, dividends have been paid in the same
quarter as declared. Consequently, although no dividend was declared during
the First Quarter of 1995, a dividend of $.03 per share was paid during the
period that had been declared in the Fourth Quarter of 1994.
Future declarations of dividends on the Company's Common Stock are
discretionary with the Board of Directors and will depend upon the Company's
earnings, capital requirements, financial condition and other factors. Dividends
may not be paid on Company Common Stock if there are any dividend arrearages on
the Company's outstanding Preferred Stock. In addition, certain of the Company's
long-term debt instruments contain provisions that restrict the dividends that
it may pay on its capital stock. See the discussion under "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Financial Position and Liquidity," included in Item 7 of this Report and the
Note to the Company's Consolidated Financial Statements captioned "Long-Term
Debt," included in Item 8 of this Report.
On February 28, 1997, there were approximately 3,900 holders of record of
the Company's Common Stock.
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<PAGE> 11
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth summary consolidated financial information
of the Company, for the years and dates indicated:
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales.......................... $1,281,220 $1,678,210 $1,702,260 $1,582,880 $1,455,320
Operating profit (loss)............ $ 69,330 $ 108,810 $ (277,850) $ 145,720 $ 111,840
From continuing operations before
accounting change and
extraordinary items:
Income (loss).................... $ 39,920 $ 59,190 $ (234,420) $ 70,890 $ 39,040
Earnings (loss) per common
share......................... $.49 $.81 $(4.20) $.91 $.49
Per share of common stock:
Dividends declared............... $.18 $.11 $.11 $.06 --
Dividends paid................... $.18 $.14 $.10 $.04 --
At December 31:
Total assets..................... $1,228,980 $1,438,770 $1,530,690 $1,789,910 $1,807,310
Long-term debt................... $ 752,400 $ 701,910 $ 868,240 $ 788,360 $1,065,390
Shareholders' equity............. $ 164,960 $ 415,180 $ 381,140 $ 667,630 $ 353,400
</TABLE>
Results for 1996 include an after-tax charge of approximately $26 million
($.47 per common share) related to the sale of MascoTech Stamping Technologies,
Inc.
Results for 1996 are before the effect of pre-tax income of approximately
$17 million ($11.7 million after-tax or $.21 per common share) related to the
cumulative effect of an accounting change.
Results for 1995 include net gains of approximately $5 million pre-tax
related to the dispositions of businesses held for sale, and a gain of
approximately $5 million pre-tax resulting from the issuance of stock through a
public offering by an equity affiliate.
Results for 1994 include a pre-tax charge of $400 million ($315 million
after-tax or $5.35 per common share), reflecting the estimated loss on the
planned disposition of a number of the Company's businesses. See the Note to the
Company's Consolidated Financial Statements captioned "Dispositions of
Operations," included in Item 8 of this Report.
Results for 1994 include pre-tax gains of approximately $17.9 million
related to the sale by the Company of a portion of its common stock holdings of
an equity affiliate.
Results for 1994 are before the effect of a gain aggregating approximately
$18 million pre-tax ($11.7 million after-tax or $.20 per common share) related
to the partial reversal of the charge established in 1993 for the disposition of
the Company's energy segment. See the Note to the Company's Consolidated
Financial Statements captioned "Dispositions of Operations," included in Item 8
of this Report.
Results for 1994 are before the effect of $4.4 million pre-tax
extraordinary income ($2.6 million after-tax or $.04 per common share) related
to the early extinguishment of convertible debt.
Results for 1993 and 1992 include pre-tax income of approximately $9
million and $25 million, respectively, as a result of gains associated with the
sale of common stock through public offerings by equity affiliates and, in 1992,
a prepayment premium related to the redemption of debentures held by the
Company. This income was largely offset by costs and expenses related to
cost-reduction initiatives, the restructuring of certain operations and product
lines, adjustments to the carrying value of certain long-term assets, and other
costs and expenses.
Results for 1993 were reduced by a charge of approximately $.03 per common
share reflecting the application of the increased 1993 federal corporate income
tax rate to adjust deferred tax balances as of December 31, 1992.
Results for 1993 are before the effect of a $5.8 million pre-tax
extraordinary charge ($3.7 million after-tax or $.06 per common share) related
to the early extinguishment of subordinated debt. 1993 results are also
10
<PAGE> 12
before an after-tax charge of approximately $22 million ($.39 per common share)
related to the disposition of a segment of the Company's business. Net income
for 1993 before preferred dividends was $47.6 million or $.57 per common share.
Income from continuing operations per common share in 1996 and 1993 is
presented on a fully diluted basis. Primary earnings from continuing operations
per common share were $.50 and $.97 in 1996 and 1993, respectively. For all
other years presented, the assumed conversion of dilutive securities is
anti-dilutive.
Income (loss) from continuing operations before accounting change and
extraordinary income (loss) attributable to common stock was $27.0 million,
$46.2 million, $(247.4) million, $56.0 million and $29.7 million after preferred
stock dividends in 1996, 1995, 1994, 1993 and 1992, respectively.
11
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
MASCOTECH
Masco Corporation undertook a major corporate restructuring during 1984,
transferring its Products for Industry businesses to the Company at their
historical net book value. MascoTech became a separate public company in
mid-1984, when Masco Corporation distributed common shares of MascoTech as a
special dividend to its shareholders. At December 31, 1996, Masco Corporation
owned approximately 21 percent of MascoTech common stock outstanding.
In 1993, the Company changed its name to MascoTech, Inc. from Masco
Industries, Inc. to reflect the significance of technology in the design,
engineering and manufacturing of many of the Company's products and services.
CORPORATE DEVELOPMENT
Since mid-1984, the Company has invested more than $1.5 billion in capital
expenditures and acquisitions combined to expand the Company's product and
technological positions in its industrial markets.
Since late 1988, the Company has divested several businesses as part of its
long-term strategic plan to de-leverage its balance sheet and focus on its core
operating capabilities. The Company's divestiture activity included several
businesses transferred to its equity affiliate, TriMas Corporation ("TriMas"),
and in late 1993 the announcement of the Company's plan to dispose of its energy
segment. In addition, in late 1994 the Company announced the planned disposition
of a number of businesses including its architectural products, defense and
certain transportation-related products and services businesses. Also, in
separate transactions, the Company disposed of its remaining heavy-gauge
stamping operations in 1996 and its Technical Services business in January,
1997. The Company has realized cash proceeds of approximately $870 million
through January, 1997, from its divestiture activity, which have been applied to
reduce the Company's indebtedness and to fund its core businesses' expanded
capital investment programs. The Company's remaining core operations are
comprised of metalworking and aftermarket businesses.
In early 1993, the Company acquired from Masco Corporation 10 million
shares of Company Common Stock, $77.5 million of the Company's 12% Exchangeable
Preferred Stock held by Masco Corporation, and Masco Corporation's holdings of
Emco Limited ("Emco") common stock and convertible debentures. In exchange,
Masco Corporation received from the Company $87.5 million in cash, $100 million
of the Company's 10% Exchangeable Preferred Stock (subsequently redeemed in
1993) and seven-year warrants to purchase 10 million shares of Company Common
Stock at $13 per share.
The Company's major shareholder, Masco Corporation, had a long-standing
stated objective to simplify its corporate structure by reducing its affiliate
investments. More recently, Masco Corporation had committed to its shareholders
that Masco Corporation would reduce its investment in MascoTech to below 20
percent. Given the possible alternatives available to Masco Corporation to
accomplish this objective and the related uncertainty as to what action Masco
Corporation might take, together with the positive long-term outlook for
MascoTech, the MascoTech Board of Directors decided to address this issue by
proactively pursuing the purchase of Masco Corporation's holdings in MascoTech.
The MascoTech Board of Directors believed that purchasing and retiring a
substantial number of MascoTech shares (at a reasonable price) would help create
long-term value for the Company's shareholders.
As a result, in late 1996, the Company purchased from Masco Corporation 17
million shares of MascoTech common stock and warrants to acquire 10 million
shares of MascoTech common stock, for approximately $266 million. As part of
this transaction, and given his role as Chairman of both Masco Corporation and
MascoTech, Richard Manoogian also agreed to sell to MascoTech one million shares
of MascoTech common stock at the then current market price of $13 5/8. As a
result, his seven percent ownership in MascoTech common stock remains
approximately the same after the share purchases. Although these transactions
result in the additional leverage of the Company's balance sheet in the
near-term, the Company believes that the substantial reduction in MascoTech
common shares outstanding should enhance the long-term financial returns for its
shareholders.
12
<PAGE> 14
DISPOSITION OF NON-CORE BUSINESSES
In late 1994, the Company adopted a plan to dispose, by sale or
liquidation, a number of businesses, including its architectural products,
defense and certain of its transportation-related products and services
businesses, as part of its long-term strategic plan to increase the focus on its
core operating capabilities. The disposition of these businesses did not meet
the criteria for discontinued operations treatment for accounting purposes;
accordingly, the sales and results of operations of these businesses are
included in continuing operations until disposition. Through dates of sale, such
businesses held for disposition had sales of approximately $90 million, $468
million and $637 million in 1996, 1995 and 1994, respectively, and operating
losses before gains (charge) on disposition of businesses, net of $14 million,
$11 million and $7 million in 1996, 1995 and 1994, respectively.
The Company's carrying value of a number of the businesses to be disposed
exceeded the estimated proceeds expected from such dispositions. To reflect the
estimated loss on the disposition of these businesses, the Company recorded a
non-cash charge in 1994 aggregating $400 million pre-tax (approximately $315
million after-tax or $5.35 per common share) for those businesses for which a
loss was anticipated. At December 31, 1996, the Company has substantially
completed the disposition of such businesses for aggregate proceeds (including
related tax benefits) of approximately $400 million. The cash portion of these
proceeds has been applied to reduce the Company's indebtedness and for
investment in its core businesses.
In May, 1996, the Company sold MascoTech Stamping Technologies, Inc.
(MSTI), a wholly owned subsidiary, to Tower Automotive, Inc. (Tower) resulting
in an after-tax loss of approximately $26 million ($.47 per common share),
including after-tax losses of approximately $1 million related to the closure of
a MSTI manufacturing facility not included in the sale. The Company received
initial consideration of approximately $80 million, consisting principally of
$55 million in cash, 785,000 shares of Tower common stock and warrants to
purchase additional Tower common stock. The Company applied the cash proceeds
(including approximately $14 million received from the subsequent sale of
600,000 shares of Tower common stock) to reduce its indebtedness. The Company
may receive additional consideration, contingent upon the future earnings of
MSTI over the next three years, which, if entirely earned, would substantially
offset the loss.
In early 1997, the Company completed the sale of its Technical Services
Group ("TSG," comprised of the Company's engineering and technical business
services units) to MSX International, Inc. Also included in this transaction
were the net assets of APX International ("APX") which were acquired by the
Company in November, 1996. The sale resulted in total proceeds to the Company of
approximately $145 million, subject to certain adjustments, consisting of cash,
subordinated debentures, preferred stock and an approximate 45 percent common
equity interest in MSX International, Inc. Net proceeds to the Company will
approximate $90 million, after taking into account the purchase price for APX
and taxes payable in connection with this transaction. The excess of the
consideration received by the Company over the book value of the related net
assets has been deferred and will be recognized when cash is received.
Businesses held for sale or sold, including MSTI and TSG, had sales of
approximately $412 million, $874 million and $964 million in 1996, 1995 and
1994, respectively, and operating income (losses) before gains (charge) on
disposition of businesses, net of $(13) million, $5 million and $8 million in
1996, 1995 and 1994, respectively.
PROFIT MARGINS
Operating profit margins, excluding the charges in 1996 and 1994, and net
gains in 1995, from the disposition of businesses, were eight percent in 1996,
six percent in 1995 and seven percent in 1994. The increase in the operating
profit margin in 1996 compared with the previous two years is attributable to
the disposition of non-core businesses which had margins lower than the
Company's core operations. In addition, operating margins for the Company's core
businesses increased as a result of the reduction of launch and start-up related
costs and expenses incurred in 1995 and 1994 for new products associated with
the Company's capital expansion programs.
13
<PAGE> 15
CASH FLOWS AND CAPITAL EXPENDITURES
Net cash flows from operating activities decreased to $129 million in 1996
from $158 million in 1995. Net cash flows from operating activities in 1996 were
reduced by the increase in the Company's marketable securities portfolio.
In early 1997, the Company amended its revolving credit agreement; as a
result, the amended $575 million revolving credit agreement is due 2002.
Reflecting the favorable long-term prospects for MascoTech, the Company's
Board of Directors authorized in 1994 the repurchase of 10 million shares of
Company Common Stock and Convertible Preferred Stock. Pursuant to this
authorization, the Company has repurchased and retired approximately six million
shares of Company Common Stock since 1994 at a cost of approximately $75
million. In addition, in October, 1996, the Company purchased and retired 18
million shares of Company Common Stock and warrants to purchase 10 million
shares of Company Common Stock for cash and notes approximating $280 million
(see "Corporate Development" and "Shareholders' Equity" note to the Company's
Consolidated Financial Statements included in Item 8 of this Report).
The Company in 1996 increased the quarterly dividend on its common stock to
$.05 per share from $.04.
On March 15, 1995, the Company redeemed at maturity $233 million of its 10%
Senior Subordinated Notes utilizing its bank revolving credit agreement.
In January, 1994, the Company issued, in a public offering, approximately
$345 million of 4 1/2% Convertible Subordinated Debentures due December 15,
2003. These debentures are convertible into Company Common Stock at $31 per
share. The net proceeds of approximately $337 million were used to redeem $250
million of 10 1/4% Senior Subordinated Notes on February 1, 1994 and to reduce
other indebtedness.
Capital expenditures declined in 1996 to approximately $44 million from
$110 million and $115 million in 1995 and 1994, respectively. During 1995 and
1994, the Company made significant expenditures in capital programs to support
the Company's metalworking and aftermarket businesses. These expenditures for
new advanced manufacturing technologies, product line extensions and capacity
for new products were the result of the Company's belief in the favorable
long-term outlook for these businesses and to meet increased demand for certain
product programs.
INVENTORIES
The Company's investment in inventories for its core businesses
approximated $70 million at December 31, 1996. The decline from 1995 levels is
the result of the disposition of MSTI and the reclassification of the Company's
Technical Services Group to net assets of businesses held for disposition. The
Company's continued emphasis on inventory management, utilizing Just-In-Time
(JIT) and other inventory management techniques, has contributed to higher
inventory turnover rates in recent years.
FINANCIAL POSITION AND LIQUIDITY
Although the Company's total debt outstanding only increased by
approximately $50 million during 1996, debt as a percent of debt plus equity
increased to 82 percent at December 31, 1996 from 63 percent at December 31,
1995, primarily as a result of the common share and warrant purchase from Masco
Corporation. The application of cash proceeds from the sale of the Technical
Services Group and the potential transfer of the Company's Emco holdings to
Masco Corporation would reduce the Company's indebtedness to approximately $600
million on a pro forma basis at December 31, 1996, of which approximately $310
million is 4 1/2% Convertible Subordinated Debentures due 2003. The Company's
interest coverage ratio remains strong, and the Company expects that its ratio
of debt to total debt plus equity will improve as a result of the transactions
mentioned above, from the disposition of other financial assets and from the
operating performance of its businesses.
At December 31, 1996 current assets, which aggregated approximately $394
million, were in excess of two times current liabilities. In addition, the
Company has significant financial assets, including ownership positions in the
securities of three publicly traded companies with an aggregate carrying value
of approxi-
14
<PAGE> 16
mately $229 million. This compares with an aggregate quoted market value at
December 31, 1996 (which may differ from the amounts that could have been
realized upon disposition) of approximately $505 million.
Additional borrowings available under the Company's amended revolving
credit agreement and otherwise, and anticipated internal cash flows are expected
to provide sufficient liquidity to fund the Company's foreseeable working
capital, capital expansion programs and other investment needs.
The Company's amended revolving credit agreement contains restrictions
including maintenance of a specified level of tangible shareholders' equity, the
ratio of senior debt to earnings and the ratio of debt to equity. Under the most
restrictive of these provisions, approximately $70 million was available at
December 31, 1996 for the payment of cash dividends and the acquisition of
Company Common Stock. In addition, future cash dividends and any acquisition of
Company Common Stock and Convertible Preferred Stock could be further
accomplished with internal cash flows from operations.
An equity affiliate of the Company has called for the redemption or
conversion of a convertible debt instrument in the first quarter of 1997. The
Company may recognize a gain from the change in the Company's common equity
ownership interest in the affiliate. The gain, if any, is dependent upon the
number of convertible debentures converted to common stock.
GENERAL FINANCIAL ANALYSIS
1996 VERSUS 1995
Sales for 1996 declined to $1.3 billion from $1.7 billion in 1995,
reflecting the previously announced disposition of certain businesses. Sales of
the Company's metalworking and aftermarket businesses, however, increased eight
percent from 1995 to approximately $.9 billion, while sales of the Company's
businesses held for sale or sold decreased approximately 53 percent from the
comparable period in 1995 as a result of the disposition of a number of such
businesses.
Income after preferred stock dividends in 1996 was $38.7 million or $.70
per common share. Results in 1996 include an after-tax loss of approximately $26
million ($.47 per common share) related to the sale of the Company's heavy-gauge
stamping operations (MSTI) which more than offset after-tax income of
approximately $11.7 million ($.21 per common share) related to the cumulative
effect of an accounting change. Income after preferred stock dividends in 1995
was $46.2 million or $.81 per common share.
Operating profit in 1996 for the metalworking and aftermarket businesses,
before general corporate expense, increased to approximately $136 million from
$116 million in 1995, resulting from increased volume and the reduction of
launch and start-up costs and expenses related to the Company's capital
expansion programs. Businesses held for sale or sold (including MSTI and TSG)
had operating income (losses) before general corporate expense and gains
(charge) on disposition of businesses, net of approximately $(13) million and $5
million for 1996 and 1995, respectively.
In December, 1994, the Company announced the planned disposition of a
number of businesses, including its architectural products, defense and certain
of its transportation-related products and services businesses, as part of its
long-term strategic plan to increase the focus on its core operating
capabilities. During 1995 and 1996, the Company completed the disposition of
such businesses for proceeds aggregating approximately $400 million. Net assets
of businesses held for sale decreased by approximately $167 million during 1996
as a result of the disposition of such businesses and from the reduction of
assets employed in these businesses through operating activity, asset sales and
the redeployment of certain assets. Net assets of businesses held for sale at
December 31, 1996 reflect the net assets of the Company's Technical Services
Group and APX International which were sold January 3, 1997.
In 1995, the Company sold businesses in transactions which resulted in net
gains of approximately $25 million. These net gains were substantially offset by
reductions in the estimated net proceeds that the Company expected to receive
from certain businesses remaining to be sold, aggregating approximately $12
million, and by certain exit costs related to the businesses sold or held for
sale incurred in 1995 aggregating approximately $8 million.
15
<PAGE> 17
Other income (expense), net in 1996, was income of approximately $8 million
as compared with expense of approximately $9 million in 1995. Results for 1996
benefitted from reduced interest expense as proceeds from the disposition of
businesses were applied to reduce the Company's indebtedness as well as from
increased earnings from equity affiliates. Results for 1995 were impacted by
pre-tax income of approximately $5 million as a result of gains associated with
the sale of common stock through a public offering by an equity affiliate.
The Company's 1996 effective tax rate differs from the statutory rate
principally because a significant portion of the loss on the sale of the
heavy-gauge stamping operations does not result in a tax benefit.
1995 VERSUS 1994
Sales for 1995 were $1.7 billion which approximated 1994 sales. Sales of
the Company's metalworking and aftermarket businesses, however, increased nine
percent from 1994 to approximately $.8 billion, while sales of the Company's
businesses held for sale or sold decreased approximately nine percent from the
comparable period in 1994 as a result of the disposition of a number of such
businesses.
Income after preferred stock dividends in 1995 was $46.2 million or $.81
per common share, compared with a loss of $3.96 per common share in 1994 which
reflects the non-cash charge of $400 million pre-tax ($315 million after-tax)
for the anticipated loss on the disposition of non-core businesses.
Operating profit from continuing operations (excluding the gains (charge)
in 1995 and 1994, respectively, on disposition of businesses, net) in 1995 for
the metalworking and aftermarket businesses, before general corporate expense,
decreased by $11 million to approximately $116 million from $127 million in
1994. Although 1995 results benefitted from increased sales in our metalworking
and aftermarket businesses, operating performance was negatively impacted by
increased costs and expenses reflecting start-up costs associated with the
Company's expanded capital investment programs and increased steel costs.
Businesses held for sale or sold (including MSTI and TSG) had operating profit
before general corporate expense and gains (charge) on disposition of
businesses, net of approximately $5 million and $8 million for 1995 and 1994,
respectively.
In December, 1994, the Company announced the planned disposition of a
number of businesses, including its architectural products, defense and certain
of its transportation-related products and services businesses, as part of its
long-term strategic plan to increase the focus on its core operating
capabilities. At December 31, 1995, the Company has disposed of certain of such
businesses for proceeds approximating $180 million. The Company expects that the
divestiture of the remaining businesses held for sale will be completed by
mid-1996 for additional proceeds (including related tax benefits) approximating
$220 million, of which approximately $120 million was received in January, 1996.
Net assets of businesses held for sale decreased by $212 million during 1995 as
a result of the disposition of such businesses and from the reduction of assets
employed in these businesses through operating activity, asset sales and the
redeployment of certain assets.
During 1995, the Company sold businesses in transactions which resulted in
net gains of approximately $25 million. These net gains were substantially
offset by reductions in the estimated net proceeds that the Company expected to
receive from certain businesses remaining to be sold, aggregating approximately
$12 million, and by certain exit costs related to the businesses sold or held
for sale incurred in 1995 aggregating approximately $8 million.
Other income (expense), net in 1995 was an expense of $9 million compared
with income of $13 million in 1994. Results for 1995 were impacted by a gain of
approximately $5 million pre-tax resulting from the issuance of common stock
through a public offering by an equity affiliate and from lower investment
income as compared with 1994. Other income, net in 1994 included gains of
approximately $17.9 million pre-tax from sales of a portion of the Company's
common stock holdings of an equity affiliate.
Results for 1994 also benefitted from the partial reversal of the charge
established in 1993 for discontinued operations of approximately $11.7 million
after-tax and from an extraordinary gain of approximately $2.6 million after-tax
related to the early extinguishment of debt.
16
<PAGE> 18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of MascoTech, Inc.:
We have audited the accompanying consolidated balance sheet of MascoTech,
Inc. and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of operations and cash flows for each of the three years
in the period ended December 31, 1996 and the financial statement schedule as
listed in Item 14(a)(2)(i) of this Form 10-K. These financial statements and the
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepting auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of MascoTech, Inc.
and subsidiaries as of December 31, 1996 and 1995, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the information
required to be included therein.
As discussed in the footnotes to the consolidated financial statements,
effective January 1, 1996, the Company changed its method of accounting for the
impairment of long-lived assets and for long-lived assets to be disposed of.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
February 28, 1997
17
<PAGE> 19
MASCOTECH, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Current assets:
Cash and cash investments................................. $ 19,400,000 $ 16,380,000
Marketable securities..................................... 37,760,000 4,120,000
Receivables............................................... 127,530,000 216,490,000
Inventories............................................... 69,640,000 94,420,000
Deferred and refundable income taxes...................... 39,180,000 51,300,000
Prepaid expenses and other assets......................... 14,480,000 21,630,000
Net current assets of businesses held for disposition..... 85,980,000 62,410,000
-------------- --------------
Total current assets................................. 393,970,000 466,750,000
Equity and other investments in affiliates.................. 282,470,000 237,530,000
Property and equipment, net................................. 388,460,000 466,450,000
Excess of cost over net assets of acquired companies........ 69,140,000 115,750,000
Notes receivable and other assets........................... 72,090,000 47,780,000
Net non-current assets of businesses held for disposition... 22,850,000 104,510,000
-------------- --------------
Total assets......................................... $1,228,980,000 $1,438,770,000
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 58,170,000 $ 99,710,000
Accrued liabilities....................................... 96,910,000 82,400,000
Current portion of long-term debt......................... 3,370,000 5,150,000
-------------- --------------
Total current liabilities............................ 158,450,000 187,260,000
Long-term debt held by Masco Corporation.................... 151,380,000 --
Other long-term debt........................................ 601,020,000 701,910,000
Deferred income taxes and other long-term liabilities....... 153,170,000 134,420,000
-------------- --------------
Total liabilities.................................... 1,064,020,000 1,023,590,000
-------------- --------------
Shareholders' equity:
Preferred stock, $1 par: Authorized: 25 million;
Outstanding: 10.8 million (liquidation value -- $216
million)............................................... 10,800,000 10,800,000
Common stock, $1 par: Authorized: 250 million;
Outstanding: 37.3 million and 55.5 million............. 37,250,000 55,520,000
Paid-in capital........................................... 41,080,000 307,910,000
Retained earnings......................................... 61,060,000 32,380,000
Other..................................................... 14,770,000 8,570,000
-------------- --------------
Total shareholders' equity........................... 164,960,000 415,180,000
-------------- --------------
Total liabilities and shareholders' equity........... $1,228,980,000 $1,438,770,000
============== ==============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
18
<PAGE> 20
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Net sales................................... $ 1,281,220,000 $ 1,678,210,000 $ 1,702,260,000
Cost of sales............................... (1,048,110,000) (1,397,880,000) (1,385,430,000)
--------------- --------------- ---------------
Gross profit........................... 233,110,000 280,330,000 316,830,000
Selling, general and administrative
expenses.................................. (132,260,000) (176,810,000) (194,680,000)
Gains (charge) on disposition of businesses,
net....................................... (31,520,000) 5,290,000 (400,000,000)
--------------- --------------- ---------------
Operating profit (loss)................ 69,330,000 108,810,000 (277,850,000)
--------------- --------------- ---------------
Other income (expense), net:
Interest expense.......................... (29,970,000) (49,900,000) (49,830,000)
Equity and interest income from
affiliates............................. 40,460,000 31,420,000 29,810,000
Gain from change in investment of an
equity affiliate....................... -- 5,100,000 --
Other, net................................ (2,600,000) 4,850,000 33,380,000
--------------- --------------- ---------------
7,890,000 (8,530,000) 13,360,000
--------------- --------------- ---------------
Income (loss) from continuing
operations before income taxes
(credit), extraordinary item and
cumulative effect of accounting
change, net.......................... 77,220,000 100,280,000 (264,490,000)
Income taxes (credit)....................... 37,300,000 41,090,000 (30,070,000)
--------------- --------------- ---------------
Income (loss) from continuing
operations before extraordinary item
and cumulative effect of accounting
change, net.......................... 39,920,000 59,190,000 (234,420,000)
Gain on disposition of discontinued energy
operations (net of income taxes).......... -- -- 11,700,000
--------------- --------------- ---------------
Income (loss) before extraordinary item
and cumulative effect of accounting
change, net.......................... 39,920,000 59,190,000 (222,720,000)
Extraordinary income (net of income
taxes).................................... -- -- 2,600,000
Cumulative effect of accounting change (net
of income taxes).......................... 11,700,000 -- --
--------------- --------------- ---------------
Net income (loss)...................... $ 51,620,000 $ 59,190,000 $ (220,120,000)
=============== =============== ===============
Preferred stock dividends................... $ 12,960,000 $ 12,960,000 $ 12,960,000
=============== =============== ===============
Earnings (loss) attributable to common
stock................................ $ 38,660,000 $ 46,230,000 $ (233,080,000)
=============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
1996
------------------
ASSUMING
FULL 1995 1994
PRIMARY DILUTION PRIMARY PRIMARY
------- -------- ------- -------
<S> <C> <C> <C> <C>
Earnings (loss) per common and
common equivalent share:
Continuing operations........................... $.50 $.49 $.81 $(4.20)
Gain on disposition of discontinued
energy operations............................. -- -- -- .20
------ ------ ------ -------
Income (loss) before extraordinary
item and cumulative effect of
accounting change, net........................ .50 .49 .81 (4.00)
Extraordinary income............................ -- -- -- .04
Cumulative effect of accounting
change, net................................... .22 .21 -- --
------ ------ ------ -------
Earnings (loss) attributable to
common stock.................................. $.72 $.70 $.81 $(3.96)
====== ====== ====== =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
19
<PAGE> 21
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
CASH FROM (USED FOR):
OPERATING ACTIVITIES:
Net income (loss)............................. $ 51,620,000 $ 59,190,000 $(220,120,000)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities,
excluding reclassification of businesses held
for disposition:
(Gains) charge on disposition of
businesses, net.......................... 31,520,000 (5,290,000) 400,000,000
Gain from change in investment of an equity
affiliate................................. -- (5,100,000) --
Gains from sales of TriMas common stock.... -- -- (17,900,000)
Depreciation and amortization.............. 44,470,000 47,070,000 66,760,000
Equity earnings, net of dividends.......... (31,650,000) (23,360,000) (23,720,000)
Deferred income taxes...................... 8,640,000 51,330,000 (67,760,000)
(Increase) decrease in marketable
securities, net.......................... (24,890,000) 57,990,000 (34,320,000)
Decrease (increase) in receivables......... 10,200,000 (21,910,000) (37,940,000)
Decrease (increase) in inventories......... 19,190,000 4,650,000 (23,390,000)
Decrease (increase) in prepaid expenses and
other current assets...................... 38,650,000 (1,900,000) (32,860,000)
Increase (decrease) in accounts payable and
accrued liabilities....................... 9,320,000 (9,070,000) 65,330,000
Other, net, including extraordinary item... (8,820,000) 2,390,000 (6,000,000)
Net assets of businesses held for
disposition, net, including cumulative
effect of accounting change............... (19,240,000) 2,190,000 (30,410,000)
------------- ------------- -------------
Net cash from operating activities....... 129,010,000 158,180,000 37,670,000
------------- ------------- -------------
FINANCING ACTIVITIES:
Issuance of convertible debt.................. -- -- 337,240,000
Increase in other debt........................ 5,220,000 79,460,000 82,730,000
Payment or repurchase of other debt........... (114,900,000) (253,770,000) (349,230,000)
Retirement of Company Common Stock............ (14,040,000) (13,130,000) (54,130,000)
Repurchase of Company Common Stock and
warrants from Masco Corporation for cash..... (116,000,000) -- --
Payment of dividends.......................... (22,940,000) (21,000,000) (18,980,000)
Other, net.................................... (8,610,000) (2,250,000) (5,010,000)
------------- ------------- -------------
Net cash used for financing activities... (271,270,000) (210,690,000) (7,380,000)
------------- ------------- -------------
INVESTING ACTIVITIES:
Cash received from sales of TriMas
securities................................. -- -- 18,180,000
Cash received from sale of businesses......... 223,720,000 122,190,000 41,220,000
Acquisition of businesses..................... (47,200,000) (23,850,000) --
Capital expenditures.......................... (42,390,000) (95,800,000) (115,220,000)
Receipt of cash from notes receivable......... 9,300,000 6,570,000 14,640,000
Other, net.................................... 1,850,000 (2,170,000) (10,360,000)
------------- ------------- -------------
Net cash from (used for) investing
activities............................ 145,280,000 6,940,000 (51,540,000)
------------- ------------- -------------
CASH AND CASH INVESTMENTS:
Increase (decrease) for the year.............. 3,020,000 (45,570,000) (21,250,000)
At January 1.................................. 16,380,000 61,950,000 83,200,000
------------- ------------- -------------
At December 31........................... $ 19,400,000 $ 16,380,000 $ 61,950,000
============= ============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
20
<PAGE> 22
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES:
Principles of Consolidation. The consolidated financial statements include
the accounts of the Company and all majority-owned subsidiaries. All significant
intercompany transactions have been eliminated. Corporations that are 20 to 50
percent owned are accounted for by the equity method of accounting; ownership
less than 20 percent is accounted for on the cost basis unless the Company
exercises significant influence over the investee. Capital transactions by
equity affiliates, which change the Company's ownership interest at amounts
differing from the Company's carrying amount, are reflected in other income or
expense and the investment in affiliates account.
The consolidated balance sheet at December 31, 1996 reflects the
segregation of net current and net non-current assets related to the disposition
of the Company's Technical Services Group ("TSG") and, at December 31, 1995,
reflects the segregation of assets related to the plan adopted in late 1994 to
dispose of certain businesses.
The Company has a corporate services agreement with Masco Corporation,
which at December 31, 1996 owned approximately 21 percent of the Company's
Common Stock. Under the terms of the agreement, the Company pays fees to Masco
Corporation for various corporate staff support and administrative services,
research and development and facilities. Such fees, which are determined
principally as a percentage of net sales, aggregated approximately $7 million in
1996, $9 million in 1995, and $11 million in 1994.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements. Such estimates and assumptions also affect the reported amounts of
revenues and expenses during the reporting periods. Actual results may differ
from such estimates and assumptions.
Cash and Cash Investments. The Company considers all highly liquid debt
instruments with an initial maturity of three months or less to be cash and cash
investments. The carrying amount reported in the balance sheet for cash and cash
investments approximates fair value.
Marketable Securities. The Company's marketable equity securities holdings
are categorized as either trading or available-for-sale securities, and, as a
result, are stated at fair value. Changes in the fair value of trading
securities are recognized in earnings and the changes in the fair value of
available-for-sale securities are recorded in shareholders' equity, net of
deferred taxes.
Receivables. Receivables are presented net of allowances for doubtful
accounts of approximately $2.0 million at both December 31, 1996 and 1995.
Inventories. Inventories are stated at the lower of cost or net realizable
value, with cost determined principally by use of the first-in, first-out
method.
Property and Equipment, Net. Property and equipment additions, including
significant betterments, are recorded at cost. Upon retirement or disposal of
property and equipment, the cost and accumulated depreciation are removed from
the accounts, and any gain or loss is included in income. Repair and maintenance
costs are charged to expense as incurred.
Depreciation and Amortization. Depreciation is computed principally using
the straight-line method over the estimated useful lives of the assets. Annual
depreciation rates are as follows: buildings and land improvements, 2 1/2 to 10
percent, and machinery and equipment, 6 2/3 to 33 1/3 percent. Deferred
financing costs are amortized over the lives of the related debt securities. The
excess of cost over net assets of acquired companies is amortized using the
straight-line method over the period estimated to be benefitted, not exceeding
40 years. At each balance sheet date, management assesses whether there has been
a permanent impairment of the excess of cost over net assets of acquired
companies by comparing anticipated undiscounted
21
<PAGE> 23
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
future cash flows from operating activities with the carrying amount of the
excess of cost over net assets of acquired companies. The factors considered by
management in performing this assessment include current operating results,
business prospects, market trends, potential product obsolescence, competitive
activities and other economic factors. Based on this assessment, there was no
permanent impairment related to the excess of cost over net assets of acquired
companies at December 31, 1996.
At December 31, 1996 and 1995, accumulated amortization of the excess of
cost over net assets of acquired companies and patents was $29.4 million and
$42.3 million, respectively. Amortization expense was $8.5 million, $13.7
million and $22.9 million in 1996, 1995 and 1994, respectively.
Income Taxes. The Company records income taxes in accordance with Statement
of Financial Accounting Standards No. 109 ("SFAS No. 109"), "Accounting for
Income Taxes." SFAS No. 109 is an asset and liability approach that requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the Company's financial
statements or tax returns. In estimating future tax consequences, SFAS No. 109
generally allows consideration of all expected future events other than
enactments of changes in the tax law or tax rates. A provision has not been made
for U.S. or additional foreign withholding taxes on approximately $47 million of
undistributed earnings of foreign subsidiaries as those earnings are intended to
be permanently reinvested. Generally, such earnings become subject to U.S. tax
upon the remittance of dividends and under certain other circumstances. It is
not practicable to estimate the amount of deferred tax liability on such
undistributed earnings.
Earnings (Loss) Per Common Share. Primary earnings per common share are
based on the weighted average shares of common stock and common stock
equivalents outstanding (including the dilutive effect of options and warrants,
utilizing the treasury stock method) of 53.8 million and 57.1 million in 1996
and 1995, respectively. Primary loss per common share in 1994 is based on 58.9
million weighted average shares of common stock outstanding. The effect of
options and warrants on earnings per common share in 1994 would be
anti-dilutive. Primary earnings (loss) per common share are calculated on
earnings (loss) after deducting preferred stock dividends of $13.0 million in
each of 1996, 1995 and 1994.
Fully diluted earnings per common share is presented only when the assumed
conversion of convertible securities is dilutive. Convertible securities did not
have a dilutive effect on earnings (loss) per common share in 1996, 1995 or
1994. Fully diluted earnings per common share is presented in 1996 due to the
utilization of the treasury stock method.
In late 1996, the Company purchased from Masco Corporation 17 million
shares of MascoTech common stock and warrants to purchase 10 million shares of
MascoTech common stock. These shares and warrants have been retired. If such
retirement had taken place at the beginning of 1996, the pro forma primary and
fully diluted earnings per common and common equivalent share amounts would have
been $.78 and $.77, respectively, in 1996.
Recently Issued Accounting Pronouncements. At January 1, 1996, the Company
adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of," which resulted in a pre-tax gain
(because the fair value of the businesses being held for sale at January 1, 1996
exceeded the carrying value for such businesses) of $16.7 million ($11.7 million
after-tax), recorded as the cumulative effect of an accounting change. The pro
forma effect of the retroactive application of the change on the financial
statements for the years prior to 1996 has not been presented because the new
method did not have a material effect on the earnings reported for those years.
The Company adopted the disclosure requirements of SFAS No. 123, "Accounting for
Stock-Based Compensation," effective with the 1996 financial statements, and
elected to continue to measure compensation cost using the intrinsic value
method, in accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees." Accordingly, no compensation cost for stock options has been
recognized. If compensation cost had been determined based on the estimated fair
value of options granted in 1996 and 1995, consistent with the methodology in
SFAS
22
<PAGE> 24
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
No. 123, the pro forma effects on the Company's net income and income per common
share would not have been material. SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," and the
American Institute of Certified Public Accountants' Statement of Position No.
96-1, "Environmental Remediation Liabilities," become effective in 1997 and will
not have a material impact on the Company's financial statements. The Company
expects that SFAS No. 128, "Earnings Per Share," will not have a material impact
on earnings per share when adopted in 1997.
SUPPLEMENTARY CASH FLOWS INFORMATION:
Significant transactions not affecting cash were: in 1996: in addition to
cash received, approximately $25 million comprised of both common stock and
warrants (with a portion of the common stock subsequently sold for approximately
$14 million of cash), as consideration from the sale of MascoTech Stamping
Technologies, Inc.; in addition to the cash payment by the Company of $121
million, notes approximating $159 million were issued for the purchase of 18
million shares of the Company's Common Stock and warrants to purchase 10 million
shares of the Company's Common Stock (see "Shareholders' Equity" note); in 1995:
in addition to cash received, approximately $34 million comprised of both notes
receivable due from, and a 29 percent equity interest in, the acquiring company,
as consideration for a non-core business unit.
Income taxes paid (refunded) were $(12) million, $11 million and $28
million in 1996, 1995 and 1994, respectively. Interest paid was $30 million, $55
million and $61 million in 1996, 1995 and 1994, respectively.
DISPOSITIONS OF OPERATIONS:
In late 1994, the Company adopted a plan to dispose, by sale or
liquidation, a number of businesses, including its architectural products,
defense and certain of its transportation-related products and services
businesses, as part of its long-term strategic plan to increase the focus on its
core operating capabilities. Through dates of sale, the businesses held for
disposition had sales of approximately $90 million, $468 million and $637
million in 1996, 1995 and 1994, respectively, and operating losses before gains
(charge) on disposition of businesses, net of $14 million, $11 million and $7
million in 1996, 1995 and 1994, respectively. At December 31, 1996, the Company
has substantially completed the disposition of such businesses, and the
liability for accrued exit costs approximates $17 million, including
approximately $11 million related to post-employment benefits.
The Company's carrying value of a number of the businesses disposed of
exceeded the estimated proceeds expected from such dispositions. To reflect the
estimated loss on the disposition of these businesses, the Company in 1994
recorded a non-cash charge aggregating $400 million pre-tax (approximately $315
million after-tax or $5.35 per common share) for those businesses for which a
loss was anticipated.
During 1995, the Company divested a number of such businesses, in separate
transactions, for aggregate proceeds of approximately $180 million, which
resulted in net gains of approximately $25 million. These net gains were
substantially offset by reductions in the estimated net proceeds the Company
expected to receive from certain remaining businesses to be sold, aggregating
approximately $12 million, and by certain exit costs incurred in 1995
aggregating approximately $8 million.
In May, 1996, the Company sold MascoTech Stamping Technologies, Inc.
(MSTI), a wholly owned subsidiary, to Tower Automotive, Inc. (Tower) resulting
in an after-tax loss of approximately $26 million ($.47 per common share),
including after-tax losses of approximately $1 million related to the closure of
a MSTI manufacturing facility not included in the sale. The Company received
initial consideration of approximately $80 million, consisting principally of
$55 million in cash, 785,000 shares of Tower common stock and warrants to
purchase additional Tower common stock. The Company applied the cash proceeds
(including approximately $14 million received from the subsequent sale of
600,000 shares of Tower common stock) to reduce its indebtedness. The Company
may receive additional consideration, contingent upon the future earnings of
MSTI over the next three years, which, if entirely earned, would substantially
offset the loss.
23
<PAGE> 25
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On January 3, 1997, the Company completed the sale of its Technical
Services Group (comprised of the Company's engineering and technical business
services units) to MSX International, Inc. Also included in this transaction
were the net assets of APX International which were acquired by the Company in
November, 1996 for approximately $44 million. The sale will result in total
proceeds to the Company of approximately $145 million, subject to certain
adjustments, consisting of cash, subordinated debentures, preferred stock and an
approximate 45 percent common equity interest in MSX International, Inc. Net
proceeds to the Company will approximate $90 million, after taking into account
the purchase price for APX International and taxes payable in connection with
this transaction. The excess of the consideration received by the Company over
the book value of the related net assets has been deferred and will be
recognized when cash is received. The net assets of the Technical Services Group
and APX International are reflected on the consolidated balance sheet as net
assets of businesses held for disposition at December 31, 1996. The Company has
not reflected any revenues or expenses in the consolidated statement of
operations related to APX International from the date of acquisition through
December 31, 1996 as control was deemed to be temporary.
The disposition of businesses held for sale or sold, including MSTI and
TSG, did not meet the criteria for discontinued operations treatment for
accounting purposes; accordingly, the sales and results of operations of these
businesses were included in continuing operations until disposition. Businesses
held for sale or sold, including MSTI and TSG, had sales of approximately $412
million, $874 million and $964 million in 1996, 1995 and 1994, respectively, and
operating income (losses) before gains (charge) on disposition of businesses,
net of $(13) million, $5 million and $8 million in 1996, 1995 and 1994,
respectively.
In late 1993, the Company adopted a plan to divest the business units in
its energy segment. Certain of the remaining business units were sold in 1994 at
prices greater than those used in estimating the loss on disposition in 1993,
resulting in a reversal in 1994 of approximately $18 million pre-tax ($11.7
million after-tax) of the charge established in 1993.
Amounts included in the consolidated balance sheet for net assets of
businesses held for disposition consist of the following at December 31, 1996
and 1995:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995
-------- --------
<S> <C> <C>
Receivables.............................................. $ 59,110 $ 49,510
Other current assets..................................... 46,050 88,000
Current liabilities...................................... (19,180) (75,100)
-------- --------
Net current assets..................................... 85,980 62,410
-------- --------
Property and equipment, net.............................. 22,090 26,180
Other non-current assets and liabilities, net............ 760 78,330
-------- --------
Net non-current assets................................. 22,850 104,510
-------- --------
Net assets of businesses held for disposition............ $108,830 $166,920
======== ========
</TABLE>
INVENTORIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
------------------
1996 1995
------- -------
<S> <C> <C>
Finished goods............................................. $21,020 $21,120
Work in process............................................ 20,360 38,480
Raw material............................................... 28,260 34,820
------- -------
$69,640 $94,420
======= =======
</TABLE>
24
<PAGE> 26
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EQUITY AND OTHER INVESTMENTS IN AFFILIATES:
Equity and other investments in affiliates consist primarily of the
following common stock interests in publicly traded affiliates:
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
TriMas Corporation.......................................... 41% 41% 41%
Emco Limited................................................ 43% 43% 43%
Titan Wheel International, Inc. ............................ 12% 15% 20%
</TABLE>
TriMas Corporation ("TriMas") is a diversified manufacturer of commercial,
industrial and consumer products. Emco Limited ("Emco") is a Canadian-based
manufacturer and distributor of building and other industrial products. Titan
Wheel International, Inc. ("Titan") is a manufacturer of wheels, tires and other
products for agricultural, construction and off-highway equipment markets. At
December 31, 1996, the investments in Titan common stock and in Emco convertible
and other debt are classified for accounting purposes as available-for-sale
securities. Accordingly, these investments have been recorded at fair value
which was in excess of their carrying value resulting in unrealized gains of
approximately $8 million pre-tax which have been reflected as an adjustment to
shareholders' equity, net of deferred taxes of $3 million, at December 31, 1996.
The carrying amount of investments in affiliates at December 31, 1996 and
1995 and quoted market values at December 31, 1996 for publicly traded
affiliates (which may differ from the amounts that could have been realized upon
disposition) are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996
QUOTED 1996 1995
MARKET CARRYING CARRYING
VALUE AMOUNT AMOUNT
-------- -------- --------
<S> <C> <C> <C>
Common stock:
TriMas Corporation............................ $362,690 $101,880 $ 80,150
Emco Limited.................................. 65,130 49,400 43,720
Titan Wheel International, Inc................ 42,280 42,280 32,240
-------- -------- --------
Common stock holdings........................... 470,100 193,560 156,110
Convertible and other debt:
Emco Limited.................................. 35,130 35,130 32,390
-------- -------- --------
Investments in publicly traded affiliates....... $505,230 228,690 188,500
========
Other non-public affiliates..................... 53,780 49,030
-------- --------
Total........................................... $282,470 $237,530
======== ========
</TABLE>
During 1994, the Company sold a portion of its common stock holdings in
TriMas, decreasing the Company's common equity ownership interest in TriMas to
41 percent, and resulting in a pre-tax gain of $17.9 million.
In June, 1995, Titan sold newly issued common stock in a public offering
and issued common stock as a result of the conversion of convertible securities.
The Company recognized pre-tax income of approximately $5.1 million as a result
of the change in the Company's common equity ownership interest in Titan.
In December, 1996, Titan called for redemption its 4 3/4% Convertible
Subordinated Notes which resulted in the issuance of approximately 4.5 million
common shares, reducing the Company's common equity
25
<PAGE> 27
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ownership interest in Titan to approximately 12 percent. As a result, the
investment in Titan has been classified for accounting purposes as
available-for-sale.
In addition to its equity and other investments in publicly traded
affiliates, the Company has equity and other investment interests in privately
held manufacturers of automotive components, including the Company's common
equity ownership interest in Delco Remy International, Inc., a manufacturer of
automotive electric motors and other components (acquired in 1994), and Saturn
Electronics & Engineering, Inc., a manufacturer of electromechanical and
electronic automotive components (acquired in 1995).
Equity in undistributed earnings of affiliates of $57 million at December
31, 1996, $38 million at December 31, 1995 and $24 million at December 31, 1994
are included in consolidated retained earnings.
Approximate combined condensed financial data of the Company's equity
affiliates accounted for under the equity method are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
----------------------
1996 1995
--------- ---------
<S> <C> <C>
Current assets......................................... $ 839,250 $ 985,310
Current liabilities.................................... (342,980) (413,290)
--------- ---------
Working capital...................................... 496,270 572,020
Property and equipment, net............................ 453,350 581,670
Excess of cost over net assets of acquired companies... 257,160 261,300
Other assets........................................... 78,990 90,180
Long-term debt......................................... (655,370) (745,480)
Deferred income taxes and other long-term
liabilities.......................................... (73,680) (60,240)
--------- ---------
Shareholders' equity................................. $ 556,720 $ 699,450
========= =========
</TABLE>
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31
--------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net sales.................................. $2,959,980 $2,729,260 $1,989,670
========== ========== ==========
Operating profit........................... $ 269,440 $ 235,510 $ 174,850
========== ========== ==========
Earnings attributable to common stock...... $ 128,820 $ 92,700 $ 74,870
========== ========== ==========
</TABLE>
Equity and interest income from affiliates consists of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
The Company's equity in affiliates' earnings
available for common shareholders................ $35,190 $26,230 $25,970
Interest income.................................... 5,270 5,190 3,840
------- ------- -------
Equity and interest income from affiliates......... $40,460 $31,420 $29,810
======= ======= =======
</TABLE>
26
<PAGE> 28
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY AND EQUIPMENT, NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
----------------------
1996 1995
-------- --------
<S> <C> <C>
Cost:
Land and land improvements............................ $ 17,530 $ 16,030
Buildings............................................. 109,730 121,470
Machinery and equipment............................... 513,010 609,730
-------- --------
640,270 747,230
Less accumulated depreciation........................... 251,810 280,780
-------- --------
$388,460 $466,450
======== ========
</TABLE>
Depreciation expense totalled $37 million, $38 million and $44 million in
1996, 1995 and 1994, respectively.
ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
--------------------
1996 1995
------- -------
<S> <C> <C>
Salaries, wages and commissions........................... $15,930 $19,690
Income taxes.............................................. 2,810 3,260
Interest.................................................. 4,050 3,940
Insurance................................................. 33,940 30,880
Property, payroll and other taxes......................... 5,500 6,830
Other..................................................... 34,680 17,800
------- -------
$96,910 $82,400
======= =======
</TABLE>
LONG-TERM DEBT:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
----------------------
1996 1995
-------- --------
<S> <C> <C>
Bank revolving credit agreement......................... $250,000 $350,000
4 1/2% Convertible Subordinated Debentures, due 2003.... 310,000 310,000
6 5/8% Note held by Masco Corporation................... 151,380 --
Other................................................... 44,390 47,060
-------- --------
755,770 707,060
Less current portion of long-term debt.................. 3,370 5,150
-------- --------
Long-term debt.......................................... $752,400 $701,910
======== ========
</TABLE>
The interest rates applicable to the revolving credit agreement are
principally at alternative floating rates provided for in the agreement
(approximately six percent at December 31, 1996). In early 1997, the Company
amended the revolving credit agreement; as a result, the new $575 million
revolving credit agreement is due 2002.
27
<PAGE> 29
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The amended revolving credit agreement requires the maintenance of a
specified level of tangible shareholders' equity as defined, with limitations on
the ratios of senior debt to earnings and debt to equity (as defined). Under the
most restrictive of these provisions, approximately $70 million was available at
December 31, 1996 for the payment of cash dividends and the acquisition of
Company Capital Stock.
The note held by Masco Corporation was part of the consideration paid by
the Company for the purchase of 17 million shares of MascoTech common stock and
warrants to purchase 10 million shares of MascoTech common stock from Masco
Corporation. Although the note payable to Masco Corporation is due September 30,
1997, it is classified as non-current at December 31, 1996 as the Company has
the intent and the ability to refinance this borrowing on a long-term basis.
On March 15, 1995, the Company redeemed at maturity $233 million of its 10%
Senior Subordinated Notes utilizing its bank revolving credit agreement. During
1994, the Company recognized extraordinary income of $4.4 million pre-tax ($2.6
million after-tax) related to the early extinguishment of a portion of the
4 1/2% Convertible Subordinated Debentures.
The maturities of debt during the next five years are as follows (taking
into account the amended credit agreement and assuming the short-term debt
referred to above is refinanced by the amended credit agreement) (in millions):
1997 - $3; 1998 - $3; 1999 - $3; 2000 - $3; and 2001 - $1.
SHAREHOLDERS' EQUITY:
<TABLE>
<CAPTION>
(IN THOUSANDS)
RETAINED
PREFERRED COMMON PAID-IN EARNINGS SHAREHOLDERS'
STOCK STOCK CAPITAL (DEFICIT) OTHER EQUITY
--------- -------- --------- --------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994.............. $10,800 $ 60,510 $ 367,290 $ 232,120 $(3,090) $ 667,630
Net loss............................ -- -- -- (220,120) -- (220,120)
Preferred stock dividends........... -- -- -- (12,960) -- (12,960)
Common stock dividends.............. -- -- -- (6,630) -- (6,630)
Retirement of common stock.......... -- (4,070) (50,060) -- -- (54,130)
Translation adjustments, net........ -- -- -- -- 5,450 5,450
Exercise of stock options........... -- 170 1,730 -- -- 1,900
------- -------- --------- --------- ------- ---------
Balance, December 31, 1994............ 10,800 56,610 318,960 (7,590) 2,360 381,140
Net income.......................... -- -- -- 59,190 -- 59,190
Preferred stock dividends........... -- -- -- (12,960) -- (12,960)
Common stock dividends.............. -- -- -- (6,260) -- (6,260)
Retirement of common stock.......... -- (1,210) (11,920) -- -- (13,130)
Translation adjustments, net........ -- -- -- -- 6,210 6,210
Exercise of stock options........... -- 120 870 -- -- 990
------- -------- --------- --------- ------- ---------
Balance, December 31, 1995............ 10,800 55,520 307,910 32,380 8,570 415,180
Net income.......................... -- -- -- 51,620 -- 51,620
Preferred stock dividends........... -- -- -- (12,960) -- (12,960)
Common stock dividends.............. -- -- -- (9,980) -- (9,980)
Retirement of common stock and
warrants......................... -- (18,720) (270,320) -- -- (289,040)
Translation adjustments and other... -- -- -- -- 6,200 6,200
Exercise of stock options........... -- 450 3,490 -- -- 3,940
------- -------- --------- --------- ------- ---------
Balance, December 31, 1996............ $10,800 $ 37,250 $ 41,080 $ 61,060 $14,770 $ 164,960
======= ======== ========= ========= ======= =========
</TABLE>
28
<PAGE> 30
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In July, 1993, the Company issued 10.8 million shares of 6% Dividend
Enhanced Convertible Stock (DECS, classified as Convertible Preferred Stock) at
$20 per share ($216 million aggregate liquidation amount) in a public offering.
On July 1, 1997, each of the then outstanding shares of the DECS will convert
into one share of Company Common Stock, if not previously redeemed by the
Company or converted at the option of the holder, in both cases for Company
Common Stock.
Each share of the DECS is convertible at the option of the holder anytime
prior to July 1, 1997 into .806 of a share of Company Common Stock, equivalent
to a conversion price of $24.81 per share of Company Common Stock. Dividends are
cumulative and each share of the DECS has 4/5 of a vote, voting together as one
class with holders of Company Common Stock.
The Company, at its option, may redeem the DECS at a call price payable in
shares of Company Common Stock principally determined by a formula based on the
then current market price of Company Common Stock. Redemption by the Company, as
a practical matter, will generally not result in a call price that exceeds one
share of Company Common Stock or is less than .806 of a share of Company Common
Stock (resulting from the holder's conversion option).
On October 31, 1996, the Company purchased from Masco Corporation 17
million shares of MascoTech common stock and warrants to purchase 10 million
shares of MascoTech common stock, for cash and notes approximating $266 million.
Payment of the note, which approximates $151 million and bears interest at 6 5/8
percent, is due September 30, 1997 and is payable in cash or at the Company's
option partially by the transfer of its holdings in its equity affiliate, Emco
Limited. As part of this transaction, Richard A. Manoogian, Chairman of both
Masco Corporation and MascoTech, also sold to MascoTech one million shares of
MascoTech common stock (at the then current market price) for approximately
$13.6 million, for cash and a $7.6 million note bearing interest at 6 5/8
percent, payable on September 30, 1997. In addition, as part of this
transaction, Masco Corporation's agreement to purchase from the Company, at the
Company's option, up to $200 million of subordinated debentures was extended
through 2002, and the corporate services agreement with Masco Corporation was
extended until September 30, 1998. Masco Corporation also agreed that MascoTech
will have the right of first refusal to purchase the approximate 7.8 million
shares of MascoTech common stock that Masco Corporation continues to hold,
should Masco Corporation decide to dispose of such shares.
In addition, during each of 1996 and 1995, the Company repurchased and
retired approximately one million shares of its common stock in open-market
purchases, pursuant to a Board of Directors' authorized repurchase program. At
December 31, 1996, the Company may repurchase approximately four million
additional shares of Company Common Stock and Convertible Preferred Stock
pursuant to this repurchase authorization.
Under a Stock Repurchase Agreement, Masco Corporation has the right to sell
to the Company, at approximate fair market value, shares of Company Common Stock
following the occurrence of certain events that would result in an increase in
Masco Corporation's ownership percentage in excess of 49 percent of the then
outstanding shares of Company Common Stock. Such events include repurchases of
Company Common Stock initiated by MascoTech or any of its subsidiaries, and
reacquisitions of Company Common Stock through forfeitures of shares previously
awarded by the Company pursuant to its employee stock incentive plans. In each
case, MascoTech has control over the amount of Company Common Stock it would
ultimately acquire, including shares subject to repurchase under the Stock
Repurchase Agreement. The aforementioned rights expire 30 days from the date
notice is given by MascoTech. To the extent these rights have been exercised at
any balance sheet date, the Company would reclassify from permanent capital an
amount representative of the repurchase obligation.
On the basis of amounts paid (declared), cash dividends per common share
were $.18 ($.18) in 1996, $.14 ($.11) in 1995 and $.10 ($.11) in 1994.
29
<PAGE> 31
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
STOCK OPTIONS AND AWARDS:
The Company's Long-Term Stock Incentive Plan (the "Plan") provides for the
issuance of stock-based incentives in various forms. At December 31, 1996,
outstanding stock-based incentives are in the form of restricted long-term stock
awards and stock options.
Pursuant to the Plan, the Company granted long-term stock awards, net, for
480,000, 461,000 and 213,000 shares of Company Common Stock during 1996, 1995
and 1994, respectively, to key employees of the Company and affiliated
companies. The weighted average grant date fair value per share of long-term
stock awards granted during 1996 and 1995 was $14 and $12, respectively.
Compensation expense for the vesting of long-term stock awards was approximately
$2.3 million, $4.8 million and $3.3 million in 1996, 1995 and 1994,
respectively. The unamortized costs of unvested stock awards, aggregating
approximately $26 million at December 31, 1996, are being amortized over the
ten-year vesting periods.
Fixed stock options are granted to key employees of the Company and
affiliated companies and have a maximum term of 10 years. The exercise price of
each fixed option equals the market price of Company Common Stock on the date of
grant. These options either vest no later than 10 years after grant or in
installments beginning in the third year and extending through the eighth year
after grant.
A summary of the status of the Company's stock options granted under the
Plan or prior plans for the three years ended December 31, 1996 is presented
below.
<TABLE>
<CAPTION>
(SHARES IN THOUSANDS)
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Option shares outstanding, January 1........................ 3,440 3,620 3,810
Weighted average exercise price........................... $ 8 $ 7 $ 7
Option shares granted....................................... 1,370 -- 20
Weighted average exercise price........................... $15 -- $24
Option shares exercised..................................... (450) (120) (170)
Weighted average exercise price........................... $ 7 $ 7 $ 6
Option shares canceled...................................... (70) (60) (40)
Weighted average exercise price........................... $ 5 $ 5 $ 5
Option shares outstanding, December 31...................... 4,290 3,440 3,620
Weighted average exercise price........................... $10 $ 8 $ 7
Weighted average remaining option term (in years)......... 5.3 4.4 5.4
Option shares exercisable, December 31...................... 1,710 1,640 1,080
Weighted average exercise price........................... $ 9 $ 9 $ 9
</TABLE>
At December 31, 1996, options have been granted and are outstanding with
exercise prices ranging from $4 1/2 to $26 per share, the fair market value at
the dates of grant.
At December 31, 1996 and 1995, a combined total of 4,656,000 and 5,646,000
shares, respectively, of Company Common Stock were available for the granting of
options and incentive awards under the above plans.
The Company has elected to continue to apply the provisions of Accounting
Principles Board Opinion No. 25 and, accordingly, no stock option compensation
expense is included in the determination of net income in the statement of
operations. The weighted average grant date fair value of options granted was
$6.20 in 1996. Had stock option compensation expense been determined pursuant to
the methodology of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," the pro forma effects on the
Company's earnings and earnings per common share in 1996, 1995 and 1994 would
not have been material.
30
<PAGE> 32
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EMPLOYEE BENEFIT PLANS:
Pension and Profit-Sharing Benefits. The Company sponsors defined-benefit
pension plans for most of its employees. In addition, substantially all salaried
employees participate in noncontributory profit-sharing plans, to which payments
are approved annually by the Directors. Aggregate charges to income under these
plans were $11.0 million in 1996, $13.0 million in 1995 and $9.8 million in
1994.
Net periodic pension cost for the Company's defined-benefit pension plans
includes the following components for the three years ended December 31, 1996:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Service cost -- benefits earned during the year.... $ 5,230 $ 4,680 $ 4,800
Interest cost on projected benefit obligations..... 6,490 6,330 5,800
Actual (return) loss on assets..................... (3,970) (6,540) 1,850
Net amortization and deferral...................... (740) 1,600 (8,240)
------- ------- -------
Net periodic pension cost.......................... $ 7,010 $ 6,070 $ 4,210
======= ======= =======
</TABLE>
Major assumptions used in accounting for the Company's defined-benefit
pension plans are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Discount rate for obligations....................... 7.50% 7.25% 8.50%
Rate of increase in compensation levels............. 5.00% 5.00% 5.00%
Expected long-term rate of return on plan assets.... 11.00% 11.00% 13.00%
</TABLE>
The funded status of the Company's defined-benefit pension plans at
December 31, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995
----------- -----------
ACCUMULATED ACCUMULATED
BENEFITS BENEFITS
EXCEED EXCEED
RECONCILIATION OF FUNDED STATUS ASSETS ASSETS
- ------------------------------- ----------- -----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation............................ $ 72,450 $ 70,960
======== ========
Accumulated benefit obligation....................... $ 77,380 $ 76,370
======== ========
Projected benefit obligation......................... $ 89,620 $ 89,410
Assets at fair value................................... 59,710 54,480
-------- --------
Projected benefit obligation in excess of plan
assets............................................ (29,910) (34,930)
Reconciling items:
Unrecognized net loss................................ 14,690 22,350
Unrecognized prior service cost...................... 8,050 7,540
Unrecognized net asset at transition................. (930) (1,060)
Adjustment required to recognize minimum liability... (12,580) (15,810)
-------- --------
Accrued pension cost................................... $(20,680) $(21,910)
======== ========
</TABLE>
31
<PAGE> 33
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Postretirement Benefits. The Company provides postretirement medical and
life insurance benefits for certain of its active and retired employees.
The Company records its postretirement benefit plans in accordance with
Statement of Financial Accounting Standards No. 106 ("SFAS No. 106"),
"Employers' Accounting for Postretirement Benefits Other Than Pensions." This
statement requires the accrual method of accounting for postretirement health
care and life insurance based on actuarially determined costs to be recognized
over the period from the date of hire to the full eligibility date of employees
who are expected to qualify for such benefits. In conjunction with SFAS No. 106,
the Company recognizes the transition obligation on a prospective basis with the
net transition obligation amortized over 20 years. Net periodic postretirement
benefit cost includes the following components for the years ended December 31,
1996, 1995 and 1994:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost................................................ $ 400 $ 300 $ 400
Interest cost............................................... 1,600 1,900 1,800
Net amortization............................................ 800 1,100 1,300
------ ------ ------
Net periodic postretirement benefit cost.................... $2,800 $3,300 $3,500
====== ====== ======
</TABLE>
Postretirement benefit obligations, none of which are funded, are
summarized as follows at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995
-------- --------
<S> <C> <C>
Accumulated postretirement benefit obligations:
Retirees.................................................. $13,900 $ 18,400
Fully eligible active plan participants................... 800 900
Other active participants................................. 5,300 5,600
-------- --------
Total accumulated postretirement benefit obligation......... 20,000 24,900
Unrecognized prior service cost........................... (300) --
Unrecognized net gain..................................... 700 400
Unamortized transition obligation......................... (11,000) (16,000)
-------- --------
Accrued postretirement benefits............................. $ 9,400 $ 9,300
======== ========
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.25 percent in both 1996 and 1995. The assumed health
care cost trend rate in 1996 was 12 percent, decreasing to an ultimate rate in
the year 2002 of seven percent. If the assumed medical cost trend rates were
increased by one percent, the accumulated postretirement benefit obligation
would increase by $1.6 million and the aggregate of the service and interest
cost components of net periodic postretirement benefit cost would increase by
$.2 million. Included in the Company's 1994 charge for the disposition of
certain businesses are curtailment costs for postretirement benefit obligations
relating to these businesses of approximately $3.7 million.
32
<PAGE> 34
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SEGMENT INFORMATION:
The Company's business segments involve the sale of the following products
and services:
Transportation-Related Products and Services:
Precision products, generally produced using advanced metalworking
technologies with significant proprietary content, and
aftermarket products for the transportation industry.
Engineering and technical business services.
Specialty Products:
Other Industrial -- Principally doors, windows, security grilles and
office panels and partitions for commercial and residential
markets.
The Company's export sales approximated $75 million, $85 million and $102
million in 1996, 1995 and 1994, respectively.
Corporate assets consist primarily of cash and cash investments, marketable
securities, equity and other investments in affiliates and notes receivable.
33
<PAGE> 35
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
NET SALES OPERATING PROFIT (LOSS)(B)
------------------------------------ -------------------------------
1996 1995 1994 1996 1995 1994
---------- ---------- ---------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
The Company's operations by
industry segment are:
Transportation-Related Products
and Services (A)............. $1,151,000 $1,340,000 $1,332,000 $ 90,000 $144,000 $ (55,000)
Specialty Products:
Other Industrial............. 130,000 338,000 370,000 1,000 (3,000) (196,000)
---------- ---------- ---------- -------- -------- ---------
Total.................... $1,281,000 $1,678,000 $1,702,000 91,000 141,000 (251,000)
========== ========== ==========
Other income (expense), net.... 8,000 (9,000) 13,000
General corporate expense...... (22,000) (32,000) (26,000)
-------- -------- ---------
Income (loss) from continuing
operations before income
taxes (credit), extraordinary
item and cumulative effect of
accounting change, net....... $ 77,000 $100,000 $(264,000)
======== ======== =========
Corporate assets...............
Total assets.............
Foreign Operations (F)......... $ 170,000 $ 166,000 $ 116,000 $ 17,000 $ 22,000 $ 16,000
========== ========== ========== ======== ======== =========
<CAPTION>
(IN THOUSANDS)
ASSETS EMPLOYED AT
DECEMBER 31(C)
------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
The Company's operations by
industry segment are:
Transportation-Related Products
and Services (A)............. $ 742,000 $ 870,000 $ 796,000
Specialty Products:
Other Industrial............. 55,000 150,000 181,000
---------- ---------- ----------
Total.................... 797,000 1,020,000 977,000
Other income (expense), net....
General corporate expense......
Income (loss) from continuing
operations before income
taxes (credit), extraordinary
item and cumulative effect of
accounting change, net.......
Corporate assets............... 432,000 419,000 554,000
---------- ---------- ----------
Total assets............. $1,229,000 $1,439,000 $1,531,000
========== ========== ==========
Foreign Operations (F)......... $ 155,000 $ 140,000 $ 93,000
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
DEPRECIATION AND
PROPERTY ADDITIONS(D) AMORTIZATION(E)
----------------------------- -------------------------------
1996 1995 1994 1996 1995 1994
------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
The Company's operations by industry segment are:
Transportation-Related Products and Services................ $41,000 $ 96,000 $101,000 $44,000 $45,000 $48,000
Specialty Products:
Other Industrial.......................................... 3,000 14,000 14,000 2,000 7,000 19,000
------- -------- -------- ------- ------- -------
Total................................................. $44,000 $110,000 $115,000 $46,000 $52,000 $67,000
======= ======== ======== ======= ======= =======
</TABLE>
(A) Included within this segment are sales to one customer of $232 million, $397
million and $361 million in 1996, 1995 and 1994, respectively; sales to
another customer of $146 million, $182 million and $225 million in 1996,
1995 and 1994, respectively; sales to a third customer of $122 million, $178
million and $212 million in 1996, 1995 and 1994, respectively; and sales to
a fourth customer of $155 million, $136 million and $111 million in 1996,
1995 and 1994, respectively.
(B) Operating profit in 1996 includes a $32 million pre-tax loss principally
from the sale of MascoTech Stamping Technologies, Inc. This charge impacted
the Company's Transportation-Related Products and Services industry segment.
Operating profit in 1995 includes $25 million in net gains resulting from
sales of non-core businesses in the third quarter. These net gains were
substantially offset by reductions in the estimated proceeds the Company
expected to receive from businesses to be sold, aggregating $12 million, and
by certain exit costs incurred in 1995 aggregating approximately $8 million.
The net gains (charge) impact the Company's industry segments as follows:
Transportation-Related Products and Services -- $21 million and Specialty
Products -- $(2) million. The remaining $(14) million of the net gains
(charge) was allocated to General Corporate Expense. Operating loss in 1994
includes the impact of a pre-tax charge in the amount of $400 million for
the disposition of businesses. The charge impacts the Company's industry
segments as follows: Transportation-Related Products and Services -- $196
million and Specialty Products -- $191 million. The remaining $13 million of
the charge was allocated to General Corporate Expense.
(C) Assets employed at December 31, 1996, 1995 and 1994 include net assets
related to the disposition of certain operations (see "Dispositions of
Operations" note).
(D) Property additions include approximately $2 million and $14 million in 1996
and 1995, respectively, of capital expenditures for those businesses held
for disposition related to the plan adopted in late 1994.
(E) Depreciation and amortization expense include approximately $5 million in
1995 of expense for those businesses held for disposition related to the
plan adopted in late 1994.
(F) The Company's foreign operations are located principally in Western Europe.
34
<PAGE> 36
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OTHER INCOME (EXPENSE), NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995 1994
------- ------ -------
<S> <C> <C> <C>
Other, net:
Net realized and unrealized gains (losses) from marketable
securities............................................. $ (160) $ 730 $ 4,360
Gains from sales of TriMas common stock................... -- -- 17,900
Interest income........................................... 1,160 2,390 5,490
Dividend income........................................... 420 950 2,880
Other, net................................................ (4,020) 780 2,750
------- ------ -------
$(2,600) $4,850 $33,380
======= ====== =======
</TABLE>
Gains and losses realized from sales of marketable securities and gains
from sales of common stock of equity affiliates are determined on a specific
identification basis at the time of sale.
INCOME TAXES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995 1994
------- -------- ---------
<S> <C> <C> <C>
Income (loss) from continuing operations before
income taxes (credit), extraordinary item and
cumulative effect of accounting change, net:
Domestic................................... $59,870 $ 78,870 $(280,900)
Foreign.................................... 17,350 21,410 16,410
------- -------- ---------
$77,220 $100,280 $(264,490)
======= ======== =========
Provision for income taxes (credit):
Federal, current.............................. $16,170 $(24,210) $ 36,660
State and local............................... 4,650 6,110 8,880
Foreign, current.............................. 7,840 7,860 (7,850)
Deferred, principally federal................. 8,640 51,330 (67,760)
------- -------- ---------
Income taxes (credit) on income (loss) from
continuing operations before
extraordinary item and cumulative effect
of accounting change, net................ $37,300 $ 41,090 $ (30,070)
======= ======== =========
</TABLE>
35
<PAGE> 37
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of deferred taxes at December 31, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995
-------- --------
<S> <C> <C>
Deferred tax assets:
Inventories............................................ $ 2,860 $ 3,550
Expected capital loss benefit related to net assets of
businesses held for disposition..................... -- 15,600
Accrued liabilities and other, principally expected
ordinary loss benefit related to net assets of
businesses held for disposition..................... 35,170 37,250
Alternative minimum tax................................ 6,750 --
-------- --------
44,780 56,400
-------- --------
Deferred tax liabilities:
Property and equipment................................. 59,580 71,610
Other, principally equity investments in affiliates.... 57,370 45,280
-------- --------
116,950 116,890
-------- --------
Net deferred tax liability............................... $ 72,170 $ 60,490
======== ========
</TABLE>
Net current and non-current assets of businesses held for disposition at
December 31, 1995 include approximately $41 million of the foregoing deferred
tax assets.
The following is a reconciliation of tax computed at the U.S. federal
statutory rate to the provision for income taxes (credit) allocated to income
(loss) from continuing operations before income taxes (credit), extraordinary
item and cumulative effect of accounting change, net:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
U.S. federal statutory rate....................... 35% 35% 35%
------- ------- --------
Tax (credit) at U.S. federal statutory rate....... $27,020 $35,100 $(92,570)
State and local taxes, net of federal tax
benefit......................................... 3,020 3,970 5,770
Higher effective foreign tax rate................. 2,100 2,710 3,380
Tax benefit on distributed foreign earnings,
net............................................. -- -- (4,200)
Non-deductible portion of charge for disposition
of businesses................................... 5,780 -- 54,600
Amortization in excess of tax, net................ (140) 1,630 2,190
Other, net........................................ (480) (2,320) 760
------- ------- --------
Income taxes (credit) from continuing operations
before extraordinary item and cumulative
effect of accounting change, net............. $37,300 $41,090 $(30,070)
======= ======= ========
</TABLE>
36
<PAGE> 38
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS:
In accordance with Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments," the following methods
were used to estimate the fair value of each class of financial instruments:
MARKETABLE SECURITIES, NOTES RECEIVABLE AND OTHER ASSETS
Fair values of financial instruments included in marketable securities,
notes receivable and other assets were estimated using various methods including
quoted market prices and discounted future cash flows based on the incremental
borrowing rates for similar types of investments. In addition, for variable-rate
notes receivable that fluctuate with the prime rate, the carrying amounts
approximate fair value.
LONG-TERM DEBT
The carrying amount of bank debt and certain other long-term debt
instruments approximate fair value as the floating rates inherent in this debt
reflect changes in overall market interest rates. The fair values of the
Company's subordinated debt instruments are based on quoted market prices. The
fair values of certain other debt instruments are estimated by discounting
future cash flows based on the Company's incremental borrowing rate for similar
types of debt instruments.
The carrying amounts and fair values of the Company's financial instruments
at December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash and cash investments........................... $ 19,400 $ 19,400 $ 16,380 $ 16,380
Marketable securities, notes receivable and other
assets............................................ $124,270 $125,460 $ 38,710 $ 38,990
Long-term debt:
Bank debt......................................... $265,000 $265,000 $375,000 $375,000
4 1/2% Convertible Subordinated Debentures........ $310,000 $252,650 $310,000 $244,900
6 5/8% Note due Masco Corporation................. $151,380 $151,380 -- --
Other long-term debt.............................. $ 26,020 $ 24,490 $ 16,910 $ 15,330
</TABLE>
37
<PAGE> 39
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM AND OTHER SUPPLEMENTAL FINANCIAL DATA (UNAUDITED):
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
FOR THE QUARTERS ENDED
------------------------------------------------------------------------
DECEMBER SEPTEMBER JUNE MARCH
31ST 30TH 30TH 31ST
-------- --------- -------- --------
<S> <C> <C> <C> <C>
1996:
- -----
Net sales................................... $271,450 $290,790 $345,060 $373,920
Gross profit................................ $ 58,160 $ 55,580 $ 57,930 $ 61,440
Income (loss) before accounting change item:
Income (loss)............................. $ 16,450 $ 19,390 $ (6,660) $ 10,740
Per common and common equivalent share:
Primary........................... $.29 $.28 $(.18) $.16
Assuming full dilution............ $.28 $.28 $(.18) $.17
Net income (loss):
Income (loss)............................. $ 16,450 $ 19,390 $ (6,660) $ 22,440
Income (loss) attributable to common
stock.................................. $ 13,210 $ 16,150 $ (9,900) $ 19,200
Per common and common equivalent share:
Primary........................... $.29 $.28 $(.18) $.33
Assuming full dilution............ $.28 $.28 $(.18) $.32
Market price per common share:
High...................................... $17 $15 1/2 $16 1/8 $13 5/8
Low....................................... $13 1/2 $13 $12 1/2 $10 3/8
1995:
- -----
Net sales................................... $389,010 $404,900 $439,290 $445,010
Gross profit................................ $ 67,570 $ 67,050 $ 69,250 $ 76,460
Net income:
Income.................................... $ 14,670 $ 15,960 $ 15,100 $ 13,460
Income attributable to common stock....... $ 11,430 $ 12,720 $ 11,860 $ 10,220
Per common share.......................... $.20 $.22 $.21 $.18
Market price per common share:
High...................................... $12 1/2 $13 3/4 $12 7/8 $13 1/2
Low....................................... $10 $11 1/4 $10 1/2 $11 3/8
</TABLE>
Since dilution occurs in the first quarter 1996, earnings per common share
is presented on a fully diluted basis. However, earnings per common share on
income before accounting change item is anti-dilutive.
Results for the second quarter 1996 include an after-tax loss of
approximately $26 million related to the sale of MascoTech Stamping
Technologies, Inc.
Net income for the first quarter of 1996 includes an after-tax gain of
approximately $12 million as a result of the adoption of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," effective January 1, 1996
which was recorded as a cumulative effect of an accounting change.
The 1996 income (loss) per common share amounts for the quarters do not
total to the full year amounts due to the purchase and retirement of shares
throughout the year.
38
<PAGE> 40
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
Results for the third quarter of 1995 include net gains aggregating
approximately $25 million from the sale of certain businesses held for
disposition. These net gains were offset by reductions in the estimated net
proceeds the Company expected to receive from businesses to be sold, aggregating
$12 million and by certain exit costs incurred in 1995 aggregating approximately
$8 million.
Results for the second quarter of 1995 include pre-tax income of
approximately $5 million as a result of gains associated with the sale of common
stock through a public offering by an equity affiliate.
The following supplemental unaudited financial data combine the Company
with TriMas and have been presented for analytical purposes. The Company had a
common equity ownership interest in TriMas of approximately 41 percent at
December 31, 1996 and December 31, 1995. The interests of the other common
shareholders are reflected below as "Equity of other shareholders of TriMas."
All significant intercompany transactions have been eliminated.
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
---------------------
1996 1995
--------- ---------
<S> <C> <C>
Current assets......................................... $ 676,590 $ 718,340
Current liabilities.................................... (241,690) (241,390)
--------- ---------
Working capital................................... 434,900 476,950
Property and equipment, net............................ 583,000 640,150
Excess of cost over net assets of acquired companies... 183,690 200,210
Other assets........................................... 320,330 355,880
Bank and other debt.................................... (935,460) (889,110)
Deferred income taxes and other long-term
liabilities.......................................... (193,090) (170,780)
Equity of other shareholders of TriMas................. (228,410) (198,120)
--------- ---------
Equity of shareholders of MascoTech............... $ 164,960 $ 415,180
========= =========
</TABLE>
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31
------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net sales.................................. $1,877,080 $2,227,850 $2,232,430
========== ========== ==========
Operating profit (loss).................... $ 173,620 $ 207,490 $ (186,450)
========== ========== ==========
Income (loss) from continuing operations
before extraordinary item and cumulative
effect of accounting change, net......... $ 39,920 $ 59,190 $ (234,420)
========== ========== ==========
</TABLE>
39
<PAGE> 41
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding executive officers required by this Item is set forth
as a Supplementary Item at the end of Part I hereof (pursuant to Instruction 3
to Item 401(b) of Regulation S-K). Other information required by this Item will
be contained in the Company's definitive Proxy Statement for its 1997 Annual
Meeting of Stockholders, to be filed on or before April 30, 1997 and such
information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1997 Annual Meeting of Stockholders, to be
filed on or before April 30, 1997, and such information is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1997 Annual Meeting of Stockholders, to be
filed on or before April 30, 1997, and such information is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1997 Annual Meeting of Stockholders, to be
filed on or before April 30, 1997, and such information is incorporated herein
by reference.
40
<PAGE> 42
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) LISTING OF DOCUMENTS.
(1) Financial Statements. The Company's Consolidated Financial
Statements included in Item 8 hereof, as required at December 31,
1996 and 1995, and for the years ended December 31, 1996, 1995 and
1994, consist of the following:
Consolidated Balance Sheet
Consolidated Statement of Operations
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules.
(i) Financial Statement Schedule of the Company appended hereto,
as required for the years ended December 31, 1996, 1995 and
1994, consists of the following:
II. Valuation and Qualifying Accounts
(ii) (A) TriMas Corporation and Subsidiaries Consolidated Financial
Statements appended hereto, as required at December 31,
1996 and 1995, and for the years ended December 31, 1996,
1995 and 1994, consist of the following:
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(B) TriMas Corporation and Subsidiaries Financial Statement
Schedule appended hereto, as required for the years ended
December 31, 1996, 1995 and 1994, consists of the
following:
II. Valuation and Qualifying Accounts
(3) Exhibits.
<TABLE>
<S> <C>
3.i Restated Certificate of Incorporation of MascoTech, Inc. and
amendments thereto.(2)
3.ii Bylaws of MascoTech, Inc., as amended.(6)
4.a.i Indenture dated as of November 1, 1986 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Morgan
Guaranty Trust Company of New York, as Trustee, and
Directors' resolutions establishing the Company's 4 1/2%
Convertible Subordinated Debentures Due 2003.(4)
4.a.ii Agreement of Appointment and Acceptance of Successor Trustee
dated as of August 4, 1994 among MascoTech, Inc., Morgan
Guaranty Trust Company of New York and The First National
Bank of Chicago.(3)
4.a.iii Supplemental Indenture dated as August 5, 1994 between
MascoTech, Inc. and The First National Bank of Chicago, as
trustee.(3)
4.b Credit Agreement dated as of February 28, 1997, by and among
MascoTech, Inc., the banks party thereto, NBD Bank, as agent
for the banks, and Comerica Bank, The Bank of New York,
NationsBank, N.A. and Bank of America Illinois, as
co-agents.
</TABLE>
41
<PAGE> 43
<TABLE>
<S> <C>
4.c Credit Agreement dated February 1, 1993 among TriMas
Corporation, certain banks party thereto and NationsBank of
North Carolina, N.A. (now known as NationsBank, N.A.
(Carolinas)), as Agent(7), and First Amendment dated as of
June 30, 1995.(1)
NOTE: Other instruments, notes or extracts from agreements
defining the rights of holders of long-term debt of
MascoTech, Inc. or its subsidiaries have not been filed
since (i) in each case the total amount of long-term debt
permitted thereunder does not exceed 10% of MascoTech,
Inc.'s consolidated assets, and (ii) such instruments, notes
and extracts will be furnished by MascoTech, Inc. to the
Securities and Exchange Commission upon request.
10.a Assumption and Indemnification Agreement dated as of May 1,
1984 between Masco Industries, Inc. (now known as MascoTech,
Inc.) and Masco Corporation.(1)
10.b Corporate Services Agreement dated as of January 1, 1987
between Masco Industries, Inc. (now known as MascoTech,
Inc.) and Masco Corporation(7) and Amendment No. 1 dated as
of October 31, 1996.(8)
10.c Corporate Opportunities Agreement dated as of May 1, 1984
between Masco Industries, Inc. (now known as MascoTech,
Inc.) and Masco Corporation(1) and Amendment No. 1 dated as
of October 31, 1996.(8)
10.d Stock Repurchase Agreement dated as of May 1, 1984 between
Masco Industries, Inc. (now known as MascoTech, Inc.) and
Masco Corporation and related letter dated September 20,
1985, Amendment to Stock Repurchase Agreement dated as of
December 20, 1990 and Agreement dated as of November 23,
1993 including an amendment to Stock Repurchase
Agreement.(4)
10.e Amended and Restated Securities Purchase Agreement dated as
of November 23, 1993 ("Securities Purchase Agreement")
between MascoTech, Inc. and Masco Corporation, including
form of Note(5), Agreement dated as of November 23, 1993
relating thereto(4), and Amendment No. 1 to the Securities
Purchase Agreement dated as of October 31, 1996.(8)
10.f Registration Agreement dated as of March 31, 1993 between
Masco Industries, Inc. (now known as MascoTech, Inc.) and
Masco Corporation.(2)
10.g Stock Purchase Agreement dated as of October 15, 1996
between Masco Corporation and MascoTech. Inc.(8) and related
promissory note.
10.h Stock Purchase Agreement dated as of October 15, 1996
between Richard A. Manoogian and MascoTech, Inc.(8) and
related promissory note.
NOTE: Exhibits 10.i through 10.r constitute the management
contracts and executive compensatory plans or arrangements
in which certain of the Directors and executive officers of
the Company participate.
10.i MascoTech, Inc. 1991 Long Term Stock Incentive Plan
(Restated December 6, 1995).(1)
10.j MascoTech, Inc. 1984 Restricted Stock Incentive Plan
(Restated December 6, 1995).(1)
10.k MascoTech, Inc. 1984 Stock Option Plan (Restated December 6,
1995).(1)
10.l Masco Corporation 1991 Long Term Stock Incentive Plan.
(Restated December 6, 1995).(1)
10.m Masco Corporation 1988 Restricted Stock Incentive Plan
(Restated December 6, 1995).(1)
10.n Masco Corporation 1988 Stock Option Plan (Restated December
6, 1995).(1)
10.o Masco Corporation 1984 Stock Option Plan (Restated December
6, 1995).(1)
10.p MascoTech, Inc. Supplemental Executive Retirement and
Disability Plan.(2)
10.q MascoTech, Inc. Benefits Restoration Plan.(2)
10.r Form of Agreement dated June 29, 1989 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and certain
of its officers(2), and acknowledgement of amendment thereto
by Richard A. Manoogian (filed as part of Exhibit 10.v).
</TABLE>
42
<PAGE> 44
<TABLE>
<S> <C>
10.s Assumption and Indemnification Agreement dated as of
December 27, 1988 between Masco Industries, Inc. (now known
as MascoTech, Inc.) and TriMas Corporation.(7)
10.t Corporate Opportunities Agreement dated as of December 27,
1988 among Masco Industries, Inc. (now known as MascoTech,
Inc.), Masco Corporation and TriMas Corporation.(7)
10.u Stock Repurchase Agreement dated as of December 27, 1988
among Masco Industries, Inc. (now known as MascoTech, Inc.),
Masco Corporation and TriMas Corporation.(7)
10.v Registration Agreement dated as of December 27, 1988 among
Masco Industries, Inc. (now known as MascoTech, Inc.), Masco
Corporation and TriMas Corporation(6), Amendment dated as of
April 21, 1992 (filed herewith), Amendment to Registration
Agreement dated as of January 5, 1993(6), Amendment to
Registration Agreement dated as of May 26, 1994(2), and
Amendment to Registration Agreement dated as of May 15, 1996
(filed herewith).
10.w Stock Purchase Agreement between Masco Corporation and Masco
Industries, Inc. (now known as MascoTech, Inc.) dated as of
December 23, 1991 (regarding Masco Capital Corporation).
10.x Bridge Credit Agreement dated as of January 3, 1997 among
MSX International, Inc., Citicorp Venture Capital, Ltd. and
MascoTech, Inc.
11 Computation of Earnings (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends.
21 List of Subsidiaries.
23.a Consent of Coopers & Lybrand L.L.P. relating to MascoTech,
Inc.'s Financial Statements and Financial Statement
Schedule.
23.b Consent of Coopers & Lybrand L.L.P. relating to TriMas
Corporation's Financial Statements and Financial Statement
Schedule.
27 Financial Data Schedule.
</TABLE>
- ---------------
(1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report of Form 10-K for the year ended December 31, 1995.
(2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1994.
(3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.
(4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1993.
(5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 22, 1993.
(6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated June 22, 1993.
(7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1992.
(8) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 13, 1996.
THE COMPANY WILL FURNISH ANY OF ITS STOCKHOLDERS A COPY OF ANY OF THE ABOVE
EXHIBITS NOT INCLUDED HEREIN UPON THE WRITTEN REQUEST OF SUCH STOCKHOLDER AND
THE PAYMENT TO THE COMPANY OF THE REASONABLE EXPENSES INCURRED BY THE COMPANY IN
FURNISHING SUCH COPY OR COPIES.
43
<PAGE> 45
(B) REPORTS ON FORM 8-K.
(1) A Current Report on Form 8-K dated November 13, 1996 was filed by
MascoTech, Inc. during the quarter ended December 31, 1996 reporting
under Item 2. "Acquisition or Disposition of Assets," the Company's
purchase from Masco Corporation of shares of the Company's common
stock and warrants to purchase common stock. Included under Item 7
of such report was the following pro forma financial information:
(i) MascoTech, Inc. Pro Forma Consolidated Condensed Income
Statement for year ended December 31, 1995 (Unaudited)
(ii) MascoTech, Inc. Pro Forma Consolidated Condensed Income
Statement for the six months ended June 30, 1996 (Unaudited)
(iii) MascoTech, Inc. Pro Forma Consolidated Condensed Balance Sheet
as of June 30, 1996 (Unaudited)
(2) A Current Report on Form 8-K dated January 20, 1997 was filed by
MascoTech, Inc. during the quarter ended March 31, 1997 reporting
under Item 2. "Acquisition or Disposition of Assets," the Company's
sale of its Technical Services Group to MSX International, Inc.
Included under Item 7 of such report was the following pro forma
financial information:
(i) MascoTech, Inc. Pro Forma Condensed Consolidated Statement of
Income for year ended December 31, 1995 (Unaudited)
(ii) MascoTech, Inc. Pro Forma Condensed Consolidated Statement of
Income for the nine months ended September 30, 1996
(Unaudited)
(iii) MascoTech, Inc. Pro Forma Condensed Consolidated Balance Sheet
as of September 30, 1996 (Unaudited)
44
<PAGE> 46
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MASCOTECH, INC.
By: /s/ TIMOTHY WADHAMS
------------------------------------
TIMOTHY WADHAMS
Vice President -- Controller and
Treasurer
March 26, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ RICHARD A. MANOOGIAN Chairman of the Board
- --------------------------------------------- and Chief Executive Officer
RICHARD A. MANOOGIAN
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ TIMOTHY WADHAMS Vice President -- Controller
- --------------------------------------------- and Treasurer
TIMOTHY WADHAMS
/s/ ERWIN H. BILLIG Director March 26, 1997
- ---------------------------------------------
ERWIN H. BILLIG
/s/ PETER A. DOW Director
- ---------------------------------------------
PETER A. DOW
/s/ EUGENE A. GARGARO, JR. Director
- ---------------------------------------------
EUGENE A. GARGARO, JR.
/s/ JOHN A. MORGAN Director
- ---------------------------------------------
JOHN A. MORGAN
/s/ ROGER T. FRIDHOLM Director
- ---------------------------------------------
ROGER T. FRIDHOLM
</TABLE>
45
<PAGE> 47
MASCOTECH, INC.
FINANCIAL STATEMENT SCHEDULES
PURSUANT TO ITEM 14(A)(2) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 1996
Schedules, as required for the years ended December 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
II. Valuation and Qualifying Accounts....................... F-2
TriMas Corporation and Subsidiaries Consolidated Financial
Statements and Financial Statement Schedule............... F-3
</TABLE>
F-1
<PAGE> 48
MASCOTECH, INC.
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- --------------------------------- ---------- --------------------------- ---------- -------------
ADDITIONS
---------------------------
CHARGED
BALANCE AT CHARGED (CREDITED)
BEGINNING TO COSTS TO OTHER BALANCE AT
DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD
- --------------------------------- ---------- ------------ ----------- ---------- -------------
(A) (B)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts,
deducted from accounts
receivable in the balance
sheet:
1996........................... $1,880,000 $ 890,000 $ 20,000 $ 790,000 $2,000,000
========== ========== =========== ========== ==========
1995........................... $1,590,000 $ 400,000 $ 410,000 $ 520,000 $1,880,000
========== ========== =========== ========== ==========
1994........................... $5,130,000 $3,480,000 $(4,310,000) $2,710,000 $1,590,000
========== ========== =========== ========== ==========
</TABLE>
NOTES:
(A) Allowance of companies reclassified for businesses held for disposition, and
other adjustments, net in 1996, 1995 and 1994. Allowance of companies
acquired, and other adjustments, net in 1995.
(B) Deductions, representing uncollectible accounts written off, less recoveries
of accounts written off in prior years.
F-2
<PAGE> 49
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
and Shareholders of TriMas Corporation:
We have audited the consolidated financial statements and the financial
statement schedule of TriMas Corporation and subsidiaries listed in Item
14(a)(2)(ii)(A) and (B) of this Form 10-K. These financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of TriMas
Corporation and subsidiaries as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
February 11, 1997
F-3
<PAGE> 50
TRIMAS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Net sales....................................... $ 600,230,000 $ 553,490,000 $ 535,480,000
Cost of sales................................... (403,380,000) (371,470,000) (361,520,000)
Selling, general and administrative expenses.... (92,560,000) (83,340,000) (82,560,000)
------------- ------------- -------------
Operating profit.............................. 104,290,000 98,680,000 91,400,000
Interest expense................................ (10,810,000) (13,530,000) (12,930,000)
Other, net (principally interest income)........ 7,110,000 6,690,000 5,030,000
------------- ------------- -------------
Income before income taxes.................... 100,590,000 91,840,000 83,500,000
Income taxes.................................... 39,230,000 35,820,000 33,400,000
------------- ------------- -------------
Net income.................................... $ 61,360,000 $ 56,020,000 $ 50,100,000
============= ============= =============
Earnings per common share:
Primary....................................... $1.66 $1.51 $1.35
============= ============= =============
Fully diluted................................. $1.55 $1.42 $1.28
============= ============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 51
TRIMAS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $105,890,000 $ 92,390,000
Receivables............................................... 80,390,000 71,200,000
Inventories............................................... 92,210,000 85,490,000
Other current assets...................................... 4,130,000 2,510,000
------------ ------------
Total current assets.............................. 282,620,000 251,590,000
Property and equipment...................................... 194,540,000 173,700,000
Excess of cost over net assets of acquired companies........ 174,710,000 144,860,000
Other assets................................................ 44,800,000 46,210,000
------------ ------------
Total assets.................................... $696,670,000 $616,360,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 33,750,000 $ 24,390,000
Other current liabilities................................. 45,430,000 29,740,000
------------ ------------
Total current liabilities......................... 79,180,000 54,130,000
Deferred income taxes and other............................. 39,920,000 36,360,000
Long-term debt.............................................. 187,120,000 187,200,000
------------ ------------
Total liabilities................................. 306,220,000 277,690,000
------------ ------------
Shareholders' equity:
Common stock, $.01 par value, authorized 100 million
shares, outstanding 36.6 million shares................ 370,000 370,000
Paid-in capital........................................... 155,690,000 155,430,000
Retained earnings......................................... 238,290,000 185,370,000
Cumulative translation adjustments........................ (3,900,000) (2,500,000)
------------ ------------
Total shareholders' equity........................ 390,450,000 338,670,000
------------ ------------
Total liabilities and shareholders' equity...... $696,670,000 $616,360,000
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 52
TRIMAS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
CASH FROM (USED FOR):
OPERATIONS:
Net income.................................... $ 61,360,000 $ 56,020,000 $ 50,100,000
Adjustments to reconcile net income to net
cash from operations:
Depreciation and amortization............ 22,930,000 21,480,000 20,580,000
Deferred income taxes.................... 2,100,000 5,560,000 3,210,000
(Increase) decrease in receivables....... (1,460,000) (4,670,000) (7,280,000)
(Increase) decrease in inventories....... (2,430,000) (5,930,000) (2,860,000)
Increase (decrease) in accounts payable
and accrued liabilities................ 7,320,000 (2,500,000) 5,110,000
Other, net............................... 1,260,000 (3,710,000) (1,190,000)
------------ ------------ ------------
Net cash from operations............... 91,080,000 66,250,000 67,670,000
------------ ------------ ------------
INVESTMENTS:
Capital expenditures.......................... (26,670,000) (23,470,000) (24,310,000)
Acquisitions, net of cash acquired............ (27,490,000)
------------ ------------ ------------
Net cash from (used for) investments... (54,160,000) (23,470,000) (24,310,000)
------------ ------------ ------------
FINANCING:
Long-term debt:
Issuance................................. 27,920,000
Retirement............................... (43,280,000) (51,470,000) (330,000)
Common stock dividends paid................... (8,060,000) (6,590,000) (5,130,000)
------------ ------------ ------------
Net cash from (used for) financing..... (23,420,000) (58,060,000) (5,460,000)
------------ ------------ ------------
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the year.............. 13,500,000 (15,280,000) 37,900,000
At beginning of the year...................... 92,390,000 107,670,000 69,770,000
------------ ------------ ------------
At end of the year.......................... $105,890,000 $ 92,390,000 $107,670,000
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 53
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of TriMas
Corporation and its wholly owned subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
AFFILIATES
As of December 31, 1996 MascoTech, Inc.'s common stock ownership in the
Company approximated 41.5 percent, and Masco Corporation's common stock
ownership approximated 4.3 percent. The Company has a corporate services
agreement with Masco Corporation. Under the terms of the agreement, the Company
pays a fee to Masco Corporation for various corporate support staff,
administrative services, and research and development services. Such fee equals
.8 percent of the Company's net sales, subject to certain adjustments, and
totaled $3.3 million, $3.1 million and $3.0 million in 1996, 1995 and 1994.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. At December 31, 1996
the Company had $84.8 million invested in prime commercial paper of several
United States issuers having the highest rating given by one of the two
principal rating agencies.
RECEIVABLES
Receivables are presented net of an allowance for doubtful accounts of $1.9
million and $1.5 million at December 31, 1996 and 1995.
INVENTORIES
Inventories are stated at the lower of cost or net realizable value, with
cost determined principally by use of the first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment additions, including significant betterments, are
recorded at cost. Upon retirement or disposal of property and equipment, the
cost and accumulated depreciation are removed from the accounts and any gain or
loss is included in income. Maintenance and repair costs are charged to expense
as incurred.
DEPRECIATION AND AMORTIZATION
Depreciation is computed principally using the straight-line method over
the estimated useful lives of the assets. Annual depreciation rates are as
follows: buildings and land improvements, 2 1/2 to 5 percent, and machinery and
equipment, 6 2/3 to 33 1/3 percent. The excess of cost over net assets of
acquired companies is being amortized using the straight-line method over the
periods estimated to be benefited, not exceeding
F-7
<PAGE> 54
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. ACCOUNTING POLICIES (CONTINUED)
40 years. At December 31, 1996 and 1995, accumulated amortization of the excess
of cost over net assets of acquired companies and other intangible assets was
$36.6 million and $31.3 million. Amortization expense was $5.3 million, $5.0
million and $5.3 million in 1996, 1995 and 1994.
As of each balance sheet date management assesses whether there has been an
impairment in the value of excess of cost over net assets of acquired companies
by comparing anticipated undiscounted future cash flows from the related
operating activities with the carrying value. The factors considered by
management in performing this assessment include current operating results,
trends and prospects, as well as the effects of obsolescence, demand,
competition and other economic factors. Based on this assessment there was no
impairment at December 31, 1996.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of financial instruments classified in the balance
sheet as current assets and current liabilities approximate fair values. The
fair value of notes receivable, a portion of which is included in both
receivables and other assets, based on discounted cash flows using current
interest rates, approximates the carrying value of $9.6 million at December 31,
1996.
The carrying amount of borrowings from banks approximates fair value as the
floating rates applicable to this debt generally reflect changes in overall
market interest rates. The fair value of the Company's Convertible Subordinated
Debentures, based on quoted market prices, was $124.8 million at December 31,
1996 and $112.7 million at December 31, 1995, as compared to the carrying value
on such dates of $115.0 million.
FOREIGN CURRENCY TRANSLATION
Net assets of the Company's operations outside of the United States are
translated into U.S. dollars using current exchange rates with the effects of
translation adjustments deferred and included as a separate component of
shareholders' equity. Revenues and expenses are translated at the average rates
of exchange during the period.
EARNINGS PER COMMON SHARE
Primary earnings per common share in 1996, 1995 and 1994 were calculated on
the basis of 37.0 million weighted average common and common equivalent shares
outstanding. Fully diluted earnings per common share in 1996, 1995 and 1994 were
calculated on the basis of 42.1 million weighted average common and common
equivalent shares outstanding.
F-8
<PAGE> 55
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. ACQUISITIONS
In June 1996 the Company acquired Queensland Towbars Pty. Ltd.
("Queensland"), in July it acquired The Englass Group Limited ("Englass"), and
in the fourth quarter it acquired Heinrich Stolz GmbH ("Stolz") and Beaumont
Bolt & Gasket Co. ("Beaumont"), all for an aggregate $54.2 million of cash and
assumed liabilities. The acquisitions were accounted for as purchases. The
aggregate excess of cost over net assets acquired of $28.8 million is being
amortized on a straight-line basis over 40 years. The results of operations of
the acquired businesses have been included in the consolidated financial
statements from the respective acquisition dates. Additional purchase price
amounts, contingent upon the achievement of specified levels of future
profitability by certain of the businesses, may be payable in 1997. These
payments, if required, will be recorded as additional excess of cost over net
assets of acquired companies.
Englass is a United Kingdom-based supplier of specialty dispensing and
packaging products with applications in toiletry, pharmaceutical, veterinary,
food and consumer household markets. Stolz, based in Neunkirchen, Germany,
manufactures a wide variety of closures for industrial packaging markets.
Queensland is Australia's second largest manufacturer of vehicle hitches and
towing products. Beaumont, based in Texas, manufactures and distributes
specialty metallic and nonmetallic gaskets, and complementary bolts and
fasteners used in the refinery, chemical and petrochemical industries.
On a pro forma, unaudited basis, as if the 1996 acquisitions had all
occurred as of January 1, 1995, net sales, net income, primary earnings per
common share and fully diluted earnings per common share for 1996 would have
been $631.5 million, $63.1 million, $1.71 and $1.59, and net sales, net income,
primary earnings per common share and fully diluted earnings per common share
for 1995 would have been $592.6 million, $57.6 million, $1.56 and $1.46.
NOTE 3. SUPPLEMENTAL CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Interest paid............................................... $10,610 $13,560 $12,110
======= ======= =======
Income taxes paid........................................... $33,180 $30,690 $30,440
======= ======= =======
Significant noncash transactions:
Common stock dividends declared, payable in subsequent
year................................................... $ 2,200 $ 1,830 $ 1,460
======= ======= =======
Assumption of liabilities as partial consideration for the
assets of companies acquired........................... $26,720
=======
Increase in obligation, including accrued interest, to
former owner, MascoTech, Inc., of business acquired,
recorded as additional excess of cost over net assets
of acquired companies.................................. $ 5,850
=======
</TABLE>
F-9
<PAGE> 56
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. INVENTORIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Finished goods.............................................. $53,380 $47,490
Work in process............................................. 14,340 14,200
Raw material................................................ 24,490 23,800
------- -------
$92,210 $85,490
======= =======
</TABLE>
NOTE 5. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Cost:
Land and land improvements................................ $ 14,010 $ 13,380
Buildings................................................. 71,260 65,560
Machinery and equipment................................... 240,960 211,540
-------- --------
326,230 290,480
Less accumulated depreciation............................... 131,690 116,780
-------- --------
$194,540 $173,700
======== ========
</TABLE>
Depreciation expense was $17.7 million, $16.4 million and $15.2 million in
1996, 1995 and 1994.
NOTE 6. OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
---------------------
1996 1995
------- -------
<S> <C> <C>
Employee wages and benefits................................. $18,570 $16,010
Amount due former owner, MascoTech, Inc., of business
acquired.................................................. 5,850
Current income taxes........................................ 3,810 1,080
Interest.................................................... 2,710 2,820
Dividends................................................... 2,200 1,830
Property taxes.............................................. 1,930 1,890
Other....................................................... 10,360 6,110
------- -------
$45,430 $29,740
======= =======
</TABLE>
F-10
<PAGE> 57
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7. LONG-TERM DEBT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
-----------------------
1996 1995
-------- --------
<S> <C> <C>
Borrowings from banks....................................... $ 68,030 $ 72,000
5% Convertible Subordinated Debentures Due 2003............. 115,000 115,000
Other....................................................... 4,260 410
-------- --------
187,290 187,410
Less current maturities..................................... 170 210
-------- --------
$187,120 $187,200
======== ========
</TABLE>
At December 31, 1996 borrowings from banks are owing under the Company's
domestic $350.0 million revolving credit facility ($33.0 million), its L20.0
million revolving credit facility in England ($19.3 million), its DM 30.0
million revolving credit facility in Germany ($9.0 million) and other borrowing
arrangements in Germany ($6.7 million). At December 31, 1995 borrowings from
banks were owing under the domestic facility. The domestic facility permits the
Company to borrow under several different interest rate options, while the
foreign facilities base interest rates on the London Interbank Offered Rate
(LIBOR). At December 31, 1996 the blended interest rate on bank borrowings
equaled 5.9 percent. The facilities contain certain restrictive covenants, the
most restrictive of which, at December 31, 1996, required $270.1 million of
shareholders' equity. The Company had available credit of $341.8 million under
its revolving credit facilities at December 31, 1996.
During February 1997 TriMas called for redemption, on March 21, 1997, its
outstanding issue of $115.0 million of 5% Convertible Subordinated Debentures
Due 2003. The Debentures are convertible at the option of the holders through
March 20, 1997 into shares of Company common stock at a conversion price of
$22 5/8 per share. The Company currently plans to use long-term borrowings under
its domestic revolving credit facility to redeem the Debentures. The redemption
price for the Debentures will be 103.33 percent of the principal amount. Any
premium and unamortized debt issuance costs associated with the Debentures
redeemed will be recorded as an extraordinary charge, on an after tax basis, in
the first quarter of 1997.
F-11
<PAGE> 58
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(IN THOUSANDS)
CUMULATIVE
COMMON PAID-IN RETAINED TRANSLATION
STOCK CAPITAL EARNINGS ADJUSTMENTS TOTAL
------ -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1994................... $370 $154,190 $ 91,700 $(1,410) $244,850
Net income............................... 50,100 50,100
Common stock dividends................... (5,490) (5,490)
Other.................................... 1,020 120 1,140
---- -------- -------- ------- --------
Balance, December 31, 1994................. 370 155,210 136,310 (1,290) 290,600
Net income............................... 56,020 56,020
Common stock dividends................... (6,960) (6,960)
Other.................................... 220 (1,210) (990)
---- -------- -------- ------- --------
Balance, December 31, 1995................. 370 155,430 185,370 (2,500) 338,670
Net income............................... 61,360 61,360
Common stock dividends................... (8,440) (8,440)
Other.................................... 260 (1,400) (1,140)
---- -------- -------- ------- --------
Balance, December 31, 1996................. $370 $155,690 $238,290 $(3,900) $390,450
==== ======== ======== ======= ========
</TABLE>
On the basis of amounts paid (declared), cash dividends per common share
were $.22 ($.23) in 1996, $.18 ($.19) in 1995 and $.14 ($.15) in 1994.
Under a Stock Repurchase Agreement which expires in December 1998, Masco
Corporation and MascoTech, Inc. have the right to sell to the Company, at
approximate fair market value, shares of Company common stock following the
occurrence of certain events that would result in an increase in their
respective ownership percentage of the then outstanding shares of Company common
stock. Such events include repurchases of Company common stock initiated by
TriMas or any of its subsidiaries, and reacquisitions of Company common stock
through forfeitures of shares previously awarded by the Company pursuant to its
employee stock incentive plans. In each case, TriMas has control over the amount
of Company common stock it would ultimately acquire, including shares subject to
repurchase under the Stock Repurchase Agreement. The aforementioned rights
expire 30 days from the date notice of an event is given by TriMas and neither
Masco Corporation nor MascoTech, Inc. have ever exercised their right to sell
Company common stock to the Company. To the extent these rights have been
exercised at any balance sheet date, the Company would reclassify from permanent
capital an amount representative of the repurchase obligation.
F-12
<PAGE> 59
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. STOCK OPTIONS AND AWARDS
The Company's stock incentive plans include the TriMas Corporation 1995
Long Term Stock Incentive Plan, the 1988 Restricted Stock Incentive Plan and the
1988 Stock Option Plan. Company common stock available for grant under these
plans includes the 2,000,000 shares initially established under the 1995 plan,
plus additional shares resulting from certain reacquisitions of shares by the
Company.
The Company granted long-term incentive awards of Company common stock,
net, for 159,071 shares in 1996, 290,588 shares in 1995 and 88,118 shares in
1994, to key employees of the Company. The weighted average fair value per
share, on date of grant, of long-term incentive awards granted in 1996 and 1995
was $19.66 and $23.21. Compensation expense recorded in 1996, 1995 and 1994
related to long-term incentive awards was $2.2 million, $1.6 million and $1.2
million. The unamortized costs of incentive awards, aggregating $14.0 million at
December 31, 1996, are being amortized over the ten year vesting periods.
Fixed stock options are granted to key employees of the Company and have a
maximum term of ten years. The exercise price of each fixed option equals the
market price of the Company's common stock on the date of grant. The options
generally vest in installments beginning in the second year and extending
through the eighth year after grant. For the three years ended December 31, 1996
stock option information is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Options outstanding, January 1.............................. 576,064 594,200 604,000
Options granted:
At option prices per share of $18.38-$25.50............... 16,154 4,864
Weighted average option price per share................... $22.12 $23.35
Options exercised:
At option price per share of $8.88........................ 53,661 23,000 9,800
Options outstanding, December 31:
At option prices per share of $7.50-$8.88................. 517,539 571,200 594,200
Weighted average option price per share................ $8.45 $8.49 $8.50
Weighted average remaining term........................ 3.5 years 4.6 years 5.6 years
At option prices per share of $18.38-$25.50............... 21,018 4,864
Weighted average option price per share................ $22.40 $23.35
Weighted average remaining term........................ 4.3 years 5.3 years
Exercisable, December 31.................................... 312,552 260,464 218,000
Weighted average option price per share................... $8.94
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, in accounting for stock based compensation.
Accordingly, no compensation expense has been charged against income for fixed
stock option grants. Had compensation expense been determined based on the fair
value at the 1996 and 1995 grant dates, consistent with the methodology of
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation, the pro forma effects on the Company's net income and earnings per
share would not have been material.
At December 31, 1996 and 1995, a combined total of 2,011,642 and 2,055,803
shares of Company common stock were available for the granting of options and
incentive awards under the aforementioned plans.
F-13
<PAGE> 60
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10. RETIREMENT PLANS
The Company has noncontributory retirement benefit plans, both defined
benefit plans and profit-sharing and other defined contribution plans, for most
of its employees.
The annual expense for all plans was:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Defined contribution plans.................................. $2,480 $3,470 $3,320
Defined benefit plans....................................... 2,660 1,690 890
------ ------ ------
$5,140 $5,160 $4,210
====== ====== ======
</TABLE>
Contributions to profit-sharing and other defined contribution plans are
generally determined as a percentage of the covered employee's annual salary.
Defined benefit plans provide retirement benefits for salaried employees
based primarily on years of service and average earnings for the five highest
consecutive years of compensation. Defined benefit plans covering hourly
employees generally provide benefits of stated amounts for each year of service.
These plans are funded based on an actuarial evaluation and review of the
assets, liabilities and requirements of each plan. Plan assets are held by a
trustee and invested principally in cash equivalents and marketable equity and
fixed income instruments.
Net periodic pension cost of defined benefit plans includes the following
components:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Service cost................................................ $ 2,670 $ 2,000 $ 2,490
Interest cost............................................... 3,980 3,570 3,310
Actual (return)/loss on assets.............................. (4,010) (5,360) 1,820
Net amortization and deferral............................... 20 1,480 (6,730)
------- ------- -------
$ 2,660 $ 1,690 $ 890
======= ======= =======
</TABLE>
Weighted average rate assumptions used were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Discount rate............................................... 7.5% 7.3% 8.5%
Rate of increase in compensation levels..................... 5.1% 5.1% 5.1%
Expected long-term rate of return on plan assets............ 10.6% 10.7% 12.5%
</TABLE>
F-14
<PAGE> 61
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10. RETIREMENT PLANS (CONTINUED)
The following table sets forth the funded status of the defined benefit
plans:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------------------------------------------
1996 1995
-------------------------- --------------------------
PLANS PLANS PLANS PLANS
WHERE WHERE WHERE WHERE
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation.................... $30,850 $12,060 $30,680 $11,530
======= ======= ======= =======
Accumulated benefit obligation............... $31,220 $14,190 $31,000 $12,960
======= ======= ======= =======
Projected benefit obligation................. $41,030 $15,270 $39,900 $13,980
Plan assets at fair value...................... 35,660 9,200 33,640 7,790
------- ------- ------- -------
Projected benefit obligation (in excess of) or
less than plan assets........................ (5,370) (6,070) (6,260) (6,190)
Unrecognized net (asset) or obligation......... (980) 390 (1,160) 420
Unrecognized prior service cost................ 400 1,680 440 1,670
Unrecognized net (gain) or loss................ 5,630 3,240 7,910 3,230
Requirement to recognize minimum liability..... (4,220) (4,300)
------- ------- ------- -------
Prepaid pension cost or (pension
liability).............................. $ (320) $(4,980) $ 930 $(5,170)
======= ======= ======= =======
</TABLE>
The Company provides postretirement health care and life insurance benefits
for certain eligible retired employees under unfunded plans. Some of the plans
have cost-sharing provisions. Net periodic postretirement benefit costs during
1996, 1995 and 1994 were $1.0 million, $.8 million and $.8 million.
The aggregate accumulated postretirement benefit obligation of these
unfunded plans was $7.1 million at both December 31, 1996 and 1995. The discount
rates used in determining the accumulated postretirement benefit obligations and
the net periodic postretirement benefit costs were 7.5 percent, 7.3 percent and
8.5 percent in 1996, 1995 and 1994. The assumed health care cost trend rate in
1996 was 12.0 percent, decreasing to an ultimate rate in the years subsequent to
2001 of seven percent. A one percent increase in the assumed health care cost
trend rates would have increased the net periodic postretirement benefit cost by
$.1 million during 1996 and would have increased the accumulated postretirement
benefit obligation at December 31, 1996 by $.9 million. The Company is
amortizing the unrecognized transition accumulated postretirement benefit
obligation and subsequent plan net gains and losses in accordance with Statement
of Financial Accounting Standards No. 106. The accrued postretirement benefit
obligation was $3.5 million and $3.1 million at December 31, 1996 and 1995.
F-15
<PAGE> 62
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11. BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION
The Company's operations in its business segments consist principally of
the manufacture and sale of the following:
Specialty Fasteners: Cold formed fasteners and related metallurgical
processing.
Towing Systems: Vehicle hitches, jacks, winches, couplers and related
towing accessories.
Specialty Container Products: Industrial container closures, pressurized
gas cylinders and metallic and nonmetallic gaskets.
Corporate Companies: Specialty drills, cutters and specialized metal
finishing services, and flame-retardant facings and jacketings and
pressure-sensitive tapes.
F-16
<PAGE> 63
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11. BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
NET SALES
Specialty Fasteners.................................. $141,510 $141,050 $138,720
Towing Systems....................................... 189,540 175,000 163,130
Specialty Container Products......................... 189,320 165,670 163,880
Corporate Companies.................................. 79,860 71,770 69,750
-------- -------- --------
Total net sales................................... $600,230 $553,490 $535,480
======== ======== ========
OPERATING PROFIT
Specialty Fasteners.................................. $ 25,740 $ 27,290 $ 24,280
Towing Systems....................................... 31,480 31,080 25,660
Specialty Container Products......................... 42,890 39,040 39,060
Corporate Companies.................................. 11,980 8,420 9,850
-------- -------- --------
Total operating profit............................ 112,090 105,830 98,850
Other income (expense), net............................ (3,700) (6,840) (7,900)
General corporate expense.............................. (7,800) (7,150) (7,450)
-------- -------- --------
Income before income taxes........................ $100,590 $ 91,840 $ 83,500
======== ======== ========
IDENTIFIABLE ASSETS AT DECEMBER 31
Specialty Fasteners.................................. $143,060 $146,200 $137,190
Towing Systems....................................... 158,840 151,160 148,890
Specialty Container Products......................... 231,610 149,790 150,360
Corporate Companies.................................. 57,220 56,230 55,210
Corporate (A)........................................ 105,940 112,980 123,490
-------- -------- --------
Total assets...................................... $696,670 $616,360 $615,140
======== ======== ========
CAPITAL EXPENDITURES
Specialty Fasteners.................................. $ 4,500 $ 10,840 $ 9,140
Towing Systems....................................... 9,160 4,790 6,720
Specialty Container Products......................... 23,170 5,780 5,420
Corporate Companies.................................. 2,690 2,030 3,000
Corporate............................................ 10 30 30
-------- -------- --------
Total capital expenditures........................ $ 39,530(B) $ 23,470 $ 24,310
======== ======== ========
DEPRECIATION AND AMORTIZATION
Specialty Fasteners.................................. $ 7,510 $ 7,230 $ 6,970
Towing Systems....................................... 6,070 5,610 5,390
Specialty Container Products......................... 6,690 6,140 5,790
Corporate Companies.................................. 2,590 2,430 2,360
Corporate............................................ 70 70 70
-------- -------- --------
Total depreciation and amortization............... $ 22,930 $ 21,480 $ 20,580
======== ======== ========
</TABLE>
- -------------------------
(A) Corporate assets consist primarily of cash and cash equivalents.
(B) Including $12.9 million from businesses acquired.
Sales of the Company's foreign operations equaled $46.0 million, $33.7
million and $35.2 million in 1996, 1995 and 1994. Identifiable assets of foreign
operations totaled $82.9 million, $32.4 million and $26.5 million at December
31, 1996, 1995 and 1994. Export sales equaled less than ten percent of total
sales for each of the three years presented.
F-17
<PAGE> 64
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12. INCOME TAXES
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Income before income taxes:
Domestic................................................. $ 92,990 $86,900 $79,040
Foreign.................................................. 7,600 4,940 4,460
-------- ------- -------
$100,590 $91,840 $83,500
======== ======= =======
Provision for income taxes:
Federal.................................................. $ 29,700 $23,810 $24,240
State and local.......................................... 4,690 4,460 4,100
Foreign.................................................. 2,740 1,990 1,850
Deferred, principally federal............................ 2,100 5,560 3,210
-------- ------- -------
$ 39,230 $35,820 $33,400
======== ======= =======
</TABLE>
The following is a reconciliation of the U.S. federal statutory tax rate to
the effective tax rate:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
U.S. federal statutory tax rate............................. 35.0% 35.0% 35.0%
State and local taxes, net of federal tax benefit........... 3.0 3.1 3.2
Foreign taxes in excess of U.S. federal tax rate............ .1 .3 .3
Nondeductible amortization of excess of cost over net assets
of acquired companies..................................... .6 .7 .8
Other, net.................................................. .3 (.1) .7
----- ----- -----
Effective tax rate..................................... 39.0% 39.0% 40.0%
===== ===== =====
</TABLE>
Items that gave rise to deferred taxes:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------------------------------------------------------
1996 1995
------------------------------ ------------------------------
DEFERRED TAX DEFERRED TAX DEFERRED TAX DEFERRED TAX
ASSETS LIABILITIES ASSETS LIABILITIES
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Property and equipment...................... $23,940 $22,240
Intangible assets........................... 4,960 3,840
Accrued employee benefits................... $2,950 $1,200
Inventory................................... 620 1,080
Other....................................... 1,420 4,480 910 3,400
------ ------- ------ -------
$4,990 $33,380 $3,190 $29,480
====== ======= ====== =======
</TABLE>
F-18
<PAGE> 65
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
NOTE 13. INTERIM FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
FIRST QUARTER SECOND QUARTER
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales........................................... $147,700 $147,600 $160,200 $151,920
Gross profit........................................ $ 47,460 $ 47,600 $ 53,460 $ 50,530
Net income.......................................... $ 14,130 $ 13,440 $ 17,820 $ 16,560
Primary earnings per common share................... $.38 $.36 $.48 $.45
Fully diluted earnings per common share............. $.36 $.34 $.45 $.42
Weighted average common and common equivalent shares
outstanding:
Primary........................................ 36,966 36,996 36,983 37,001
Fully diluted.................................. 42,067 42,090 42,065 42,088
</TABLE>
<TABLE>
<CAPTION>
THIRD QUARTER FOURTH QUARTER
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales........................................... $149,620 $131,880 $142,710 $122,090
Gross profit........................................ $ 47,790 $ 42,520 $ 48,140 $ 41,370
Net income.......................................... $ 14,440 $ 13,220 $ 14,970 $ 12,800
Primary earnings per common share................... $.39 $.36 $.40 $.35
Fully diluted earnings per common share............. $.37 $.34 $.38 $.33
Weighted average common and common equivalent shares
outstanding:
Primary........................................ 36,977 36,998 36,978 36,978
Fully diluted.................................. 42,072 42,080 42,063 42,061
</TABLE>
Earnings per common share in the fourth quarter of 1996 and 1995 were
improved by $.06 and $.07, net, resulting from year end adjustments to estimates
recorded earlier in each year. Amounts adjusted include rebates from raw
material suppliers, required year end insurance reserves and incentive
compensation accruals whose final determinations require actual results for the
year. Quarterly earnings per common share amounts for both 1996 and 1995 do not
total to the full year amounts due to rounding.
QUARTERLY COMMON STOCK PRICE AND DIVIDEND INFORMATION:
<TABLE>
<CAPTION>
MARKET PRICE
------------- DIVIDENDS
HIGH LOW DECLARED
----- ----- ---------
<S> <C> <C> <C>
1996
- -----
4th Quarter.................................... $25 1/2 $22 3/8 $.06
3rd Quarter.................................... 24 1/4 19 7/8 .06
2nd Quarter.................................... 25 1/2 20 7/8 .06
1st Quarter.................................... 24 3/8 16 7/8 .05
1995
- -----
4th Quarter.................................... $22 1/4 $18 3/8 $.05
3rd Quarter.................................... 25 1/2 20 .05
2nd Quarter.................................... 24 1/4 20 1/4 .05
1st Quarter.................................... 22 3/4 19 5/8 .04
</TABLE>
F-19
<PAGE> 66
TRIMAS CORPORATION
FINANCIAL STATEMENT SCHEDULE
PURSUANT TO ITEM 14(A)(2) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
Schedule, as required, for the years ended December 31, 1996, 1995 and
1994:
<TABLE>
<CAPTION>
PAGES
-----
<C> <S> <C>
II. Valuation and Qualifying Accounts........................... F-21
</TABLE>
F-20
<PAGE> 67
TRIMAS CORPORATION
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------------------------- -------- --------
ADDITIONS
--------------------------
CHARGED CHARGED
BALANCE AT (CREDITED) (CREDITED) BALANCE
BEGINNING TO COST TO OTHER AT END
DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
----------- ---------- ------------ ---------- ---------- ---------
(A) (B)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts,
deducted from accounts receivable
in the balance sheet:
1996............................... $1,530,000 $360,000 $600,000 $640,000 $1,850,000
========== ======== ======== ======== ==========
1995............................... $2,040,000 $270,000 $ -- $780,000 $1,530,000
========== ======== ======== ======== ==========
1994............................... $1,800,000 $620,000 $ -- $380,000 $2,040,000
========== ======== ======== ======== ==========
</TABLE>
Notes:
(A) Allowance of companies acquired, and other adjustments, net.
(B) Doubtful accounts charged off, less recoveries.
F-21
<PAGE> 68
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NO.
- ------- ----------- ----
<S> <C> <C>
3.i Restated Certificate of Incorporation of MascoTech, Inc. and
amendments thereto.(2)
3.ii Bylaws of MascoTech, Inc., as amended.(6)
4.a.i Indenture dated as of November 1, 1986 between Masco
Industries Inc. (now known as MascoTech, Inc.) and Morgan
Guaranty Trust Company of New York, as Trustee, and
Directors' resolutions establishing the Company's 4 1/2%
Convertible Subordinated Debentures Due 2003.(4)
4.a.ii Agreement of Appointment and Acceptance of Successor Trustee
date as of August 4, 1994 among MascoTech, Inc., Morgan
Guaranty Trust Company of New York and The First National
Bank of Chicago.(3)
4.a.iii Supplemental Indenture dated as August 5, 1994 between
MascoTech, Inc. and The First National Bank of Chicago, as
trustee.(3)
4.b Credit Agreement dated as of February 28, 1997, by and among
MascoTech, Inc., the banks party thereto, NBD Bank, as agent
for the banks, and Comerica Bank, The Bank of New York,
Nationsbank, N.A. and Bank of America Illinois, as
co-agents.
4.c Credit Agreement dated February 1, 1993 among TriMas
Corporation, certain banks party thereto and NationsBank of
North Carolina, N.A. (now known as NationsBank, N.A.
(Carolinas)), as Agent(7), and First Amendment dated as of
June 30, 1995.(1)
NOTE: Other instruments, notes or extracts from agreements
defining the rights of holders of long-term debt of
MascoTech, Inc. or its subsidiaries have not been filed
since (i) in each case the total amount of long-term debt
permitted thereunder does not exceed 10% of MascoTech,
Inc.'s consolidated assets, and (ii) such instruments, notes
and extracts will be furnished by MascoTech, Inc. to the
Securities and Exchange Commission upon request.
10.a Assumption and Indemnification Agreement dated as of May 1,
1984 between Masco Industries, Inc. (now known as MascoTech,
Inc.) and Masco Corporation.(1)
10.b Corporate Services Agreement dated as of January 1, 1987
between Masco Industries, Inc. (now known as MascoTech,
Inc.) and Masco Corporation(7) and Amendment No. 1 dated as
of October 31, 1996.(8)
10.c Corporate Opportunities Agreement dated as of May 1, 1984
between Masco Industries, Inc. (now known as MascoTech,
Inc.) and Masco Corporation(1) and Amendment No. 1 dated as
of October 31, 1996.(8)
10.d Stock Repurchase Agreement dated as of May 1, 1984 between
Masco Industries, Inc. (now known as MascoTech, Inc.) and
Masco Corporation and related letter dated September 20,
1985, Amendment to Stock Repurchase Agreement dated as of
December 20, 1990 and Agreement dated as of November 23,
1993 including an amendment to Stock Repurchase
Agreement.(4)
10.e Amended and Restated Securities Purchase Agreement dated as
of November 23, 1993 ("Securities Purchase Agreement")
between MascoTech, Inc. and Masco Corporation, including
form of Note(5), Agreement dated as of November 23, 1993
relating thereto(4), and Amendment No. 1 to the Securities
Purchase Agreement dated as of October 31, 1996.(8)
10.f Registration Agreement dated as of March 31, 1993 between
Masco Industries, Inc. (now known as MascoTech, Inc.) and
Masco Corporation.(2)
10.g Stock Purchase Agreement dated as of October 15, 1996
between Masco Corporation and MascoTech, Inc.(8) and related
promissory note.
10.h Stock Purchase Agreement dated as of October 15, 1996
between Richard A. Manoogian and MascoTech, Inc.(8) and
related promissory note.
NOTE: Exhibits 10.i through 10.r constitute the management
contracts and executive compensatory plans or arrangements
in which certain of the Directors and executive officers of
the Company participate.
</TABLE>
<PAGE> 69
<TABLE>
<S> <C> <C>
10.i MascoTech, Inc. 1991 Long Term Stock Incentive Plan (Restated December 6, 1995).(1)
10.j MascoTech, Inc. 1984 Restricted Stock Incentive Plan (Restated December 6, 1995).(1)
10.k MascoTech, Inc. 1984 Stock Option Plan (Restated December 6, 1995).(1)
10.1 Masco Corporation 1991 Long Term Stock Incentive Plan. (Restated December 6, 1995).(1)
10.m Masco Corporation 1988 Restricted Stock Incentive Plan (Restated December 6, 1995).(1)
10.n Masco Corporation 1988 Stock Option Plan (Restated December 6, 1995).(1)
10.o Masco Corporation 1984 Stock Option Plan (Restated December 6, 1995).(1)
10.p MascoTech, Inc. Supplemental Executive Retirement and Disability Plan.(2)
10.q MascoTech, Inc. Benefits Restoration Plan.(2)
10.r Form of Agreement dated June 29, 1989 between Masco Industries, Inc. (now known as MascoTech,
Inc.) and certain of its officers(2), and acknowledgment of amendment thereto by Richard A.
Manoogian (filed as part of Exhibit 10.v).
10.s Assumption and Indemnification Agreement dated as of December 27, 1988 between Masco Industries,
Inc. (now known as MascoTech, Inc.) and TriMas Corporation.(7)
10.t Corporate Opportunities Agreement dated as of December 27, 1988 among Masco Industries, Inc. (now
known as MascoTech, Inc.), Masco Corporation and TriMas Corporation.(7)
10.u Stock Repurchase Agreement dated as of December 27, 1988 among Masco Industries, Inc. (now known
as MascoTech, Inc.), Masco Corporation and TriMas Corporation.(7)
10.v Registration Agreement dated as of December 27, 1988 among Masco Industries, Inc. (now known as
MascoTech, Inc.), Masco Corporation and TriMas Corporation(6), Amendment dated as of April 21,
1992 (filed herewith), Amendment to Registration Agreement dated as of January 5, 1993(6),
Amendment to Registration Agreement dated as of May 26, 1994(2), and Amendment to Registration
Agreement dated as of May 15, 1996 (filed herewith).
10.w Stock Purchase Agreement between Masco Corporation and Masco Industries, Inc. (now known as
MascoTech, Inc.) dated as of December 23, 1991 (regarding Masco Capital Corporation).
10.x Bridge Credit Agreement dated as of January 3, 1997 among MSX International, Inc., Citicorp
Venture Capital, Ltd. and MascoTech, Inc.
11 Computation of Earnings (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
21 List of Subsidiaries.
23.a Consent of Coopers & Lybrand L.L.P. relating to MascoTech, Inc.'s Financial Statements and
Financial Statement Schedule.
23.b Consent of Coopers & Lybrand L.L.P. relating to TriMas Corporation's Financial Statements and
Financial Statement Schedule.
27 Financial Data Schedule.
</TABLE>
- ---------------
(1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1995.
(2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1994.
(3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.
(4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1993.
<PAGE> 70
(5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 22, 1993.
(6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated June 22, 1993.
(7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1992.
(8) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 13, 1996.
<PAGE> 1
EXHIBIT 4.b
Execution Copy
MASCOTECH, INC.
________________________________________________
$575,000,000
CREDIT AGREEMENT
DATED AS OF FEBRUARY 28, 1997
______________________________________________
NBD BANK, AS AGENT
AND
COMERICA BANK,
THE BANK OF NEW YORK,
NATIONSBANK, N.A., AND
BANK OF AMERICA ILLINOIS,
AS CO-AGENTS
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I. ............................................................ 1
DEFINITIONS ........................................................... 1
1.1 CERTAIN DEFINITIONS ....................................... 1
1.2 ACCOUNTING TERMS .......................................... 17
1.3 OTHER DEFINITIONS; RULES OF CONSTRUCTION .................. 17
ARTICLE II ........................................................... 18
TERMINATION OF EXISTING CREDIT AGREEMENT .............................. 18
2.1 TERMINATION ............................................... 18
ARTICLE III. .......................................................... 18
THE LOANS AND LETTER OF CREDIT ISSUANCES .............................. 18
3.1 SYNDICATED BORROWINGS...................................... 18
3.2 NOTICE OF SYNDICATED BORROWINGS............................ 18
3.3 LETTERS OF CREDIT.......................................... 19
3.4 BID-OPTION BORROWINGS ..................................... 22
3.5 NOTICE TO BANKS; FUNDING OF LOANS. ........................ 25
3.6 THE NOTES ................................................. 27
3.7 CERTAIN FEES .............................................. 27
3.8 TERMINATION OR REDUCTION OF COMMITMENTS.................... 28
3.9 MANDATORY TERMINATION OF COMMITMENTS....................... 28
3.10 EXTENSION OF SCHEDULED EXPIRATION DATE.................... 28
ARTICLE IV ............................................................ 29
PRINCIPAL PAYMENTS; INTEREST; ETC ..................................... 29
4.1 SCHEDULED PRINCIPAL PAYMENTS .............................. 29
4.2 PREPAYMENTS OF PRINCIPAL .................................. 29
4.3 INTEREST PAYMENTS ......................................... 30
4.4 PAYMENT PROCEDURES ........................................ 31
4.5 COMPUTATION OF INTEREST AND FEES .......................... 32
<PAGE> 3
4.6 NO SETOFF OR DEDUCTION .................................... 32
4.7 OTHER PROVISIONS APPLICABLE TO FOREIGN CURRENCY
BID-OPTION LOANS .......................................... 32
ARTICLE V.............................................................. 33
CHANGE IN CIRCUMSTANCES ............................................... 33
5.1 IMPOSSIBILITY; INTEREST RATE INADEQUATE OR UNFAIR ......... 33
5.2 ILLEGALITY................................................. 33
5.3 INCREASED COST; YIELD PROTECTION........................... 34
5.4 SUBSTITUTE LOANS........................................... 36
5.5 FUNDING LOSSES............................................. 36
ARTICLE VI............................................................. 37
REPRESENTATIONS AND WARRANTIES......................................... 37
6.1 CORPORATE EXISTENCE AND POWER.............................. 37
6.2 CORPORATE AUTHORITY; NO VIOLATIONS;
GOVERNMENTAL FILINGS; ETC ................................. 37
6.3 BINDING EFFECT ............................................ 37
6.4 LITIGATION ................................................ 37
6.5 TAXES...................................................... 38
6.6 FINANCIAL CONDITION........................................ 38
6.7 COMPLIANCE WITH ERISA ..................................... 38
6.8 ENVIRONMENTAL MATTERS ..................................... 38
6.9 COMPLIANCE WITH LAWS ...................................... 39
ARTICLE VII............................................................ 39
COVENANTS ............................................................. 39
7.1 FINANCIAL STATEMENTS ...................................... 39
7.2 CERTIFICATES OF NO DEFAULT AND COMPLIANCE ................. 40
7.3 PRESERVATION OF CORPORATE EXISTENCE, ETC. ................ 41
7.4 [INTENTIONALLY OMITTED] ................................... 41
7.5 TOTAL LEVERAGE RATIO ...................................... 41
7.6 [INTENTIONALLY OMITTED] ................................... 41
7.7 TANGIBLE CAPITAL FUNDS..................................... 41
7.8 SENIOR DEBT COVERAGE ...................................... 46
<PAGE> 4
7.9 SUBSIDIARY INDEBTEDNESS.................................... 41
7.10 NEGATIVE PLEDGE .......................................... 42
7.11 DISPOSITIONS OF ASSETS; MERGERS AND CONSOLIDATIONS;
RESTRICTED TRANSFERS...................................... 43
7.12 CHANGES IN SUBORDINATED DEBT ............................. 43
7.13 USE OF PROCEEDS........................................... 43
7.14 FISCAL YEAR............................................... 44
7.15 COMPLIANCE WITH LAWS...................................... 44
ARTICLE VIII........................................................... 44
CONDITIONS OF BORROWINGS AND LETTER OF CREDIT ISSUANCES ............... 44
8.1 EACH BORROWING AND LETTER OF CREDIT ISSUANCE............... 44
8.2 INITIAL BORROWING OR LETTER OF CREDIT ISSUANCE............. 45
8.3 CLOSING ................................................... 45
ARTICLE IX............................................................. 46
EVENTS OF DEFAULT AND REMEDIES ........................................ 46
9.1 EVENTS OF DEFAULT.......................................... 46
9.2 REMEDIES................................................... 48
9.3 SET OFF ................................................... 48
ARTICLE X.............................................................. 49
THE AGENTS AND THE BANKS .............................................. 49
10.1 APPOINTMENT AND AUTHORIZATION............................. 49
10.2 AGENT AND AFFILIATES ..................................... 49
10.3 SCOPE OF AGENT'S DUTIES .................................. 49
10.4 RELIANCE BY AGENT ........................................ 49
10.5 DEFAULT .................................................. 49
10.6 LIABILITY OF AGENT........................................ 50
10.7 NONRELIANCE ON AGENT AND OTHER BANKS...................... 50
10.8 INDEMNIFICATION........................................... 50
10.9 RESIGNATION OF AGENT...................................... 51
10.10 SHARING OF PAYMENTS...................................... 51
10.11 WITHHOLDING TAX EXEMPTION ............................... 51
<PAGE> 5
10.12 THE CO-AGENTS ........................................... 52
ARTICLE XI............................................................. 52
MISCELLANEOUS ......................................................... 52
11.1 AMENDMENTS, ETC........................................... 52
11.2 NOTICES................................................... 53
11.3 NO WAIVER BY CONDUCT; REMEDIES CUMULATIVE................. 53
11.4 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS............ 53
11.5 EXPENSES AND INDEMNIFICATION.............................. 54
11.6 SUCCESSORS AND ASSIGNS.................................... 55
11.7 CONFIDENTIALITY.......................................... 57
11.8 COUNTERPARTS; EFFECTIVENESS OF TELECOPIED SIGNATURES...... 58
11.9 TABLE OF CONTENTS AND HEADINGS............................ 58
11.10 CONSTRUCTION OF CERTAIN PROVISIONS....................... 58
11.11 INDEPENDENCE OF COVENANTS................................ 58
11.12 INTEREST RATE LIMITATION................................. 58
11.13 SUBSTITUTION OF BANKS.................................... 59
11.14 COLLATERAL............................................... 59
11.15 GOVERNING LAW............................................ 59
11.16 INTEGRATION AND SEVERABILITY............................. 59
11.17 WAIVER OF JURY TRIAL..................................... 59
<PAGE> 6
SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1 - Applicable Margin Chart
SCHEDULE 2 - Certain Industrial Revenue Bonds (See Section 9.1(e)
of the Credit Agreement)
EXHIBITS
Exhibit A - Syndicated Note
Exhibit B - Bid-Option Note
Exhibit C - Notice of Syndicated Borrowing
Exhibit D - Request for Letter of Credit Issuance
Exhibit E - Bid-Option Quote Request
Exhibit F - Invitation for Bid-Option Quotes
Exhibit G - Bid-Option Quote
Exhibit H - Notice of Disbursement of Foreign Currency Bid-Option
Loan
Exhibit I - Notice of Receipt of Foreign Currency Bid-Option Loan
Payment
Exhibit J - Securities Purchase Agreement
Exhibit K - Assignment and Acceptance
Exhibit L - Notice of Substitution of Bank(s)
Exhibit M - Opinion of Counsel for the Company
Exhibit N - Opinion of Counsel for the Agent
Exhibit O - Terms of Subordination
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of February 28, 1997 (as amended,
supplemented or otherwise modified from time to time, this "Agreement"), is by
and among MASCOTECH, INC., a Delaware corporation formerly named Masco
Industries, Inc. (the "Company"), the lenders party hereto from time to time
(collectively, the "Banks" and individually, a "Bank"), NBD BANK, a Michigan
banking corporation formerly named NBD Bank, N.A., as agent (in such capacity,
the "Agent") for the Banks, and COMERICA BANK, a Michigan banking corporation,
THE BANK OF NEW YORK, a New York banking corporation, NATIONSBANK, N.A., a
national banking association, and BANK OF AMERICA ILLINOIS, an Illinois banking
corporation, as co-agents (in such capacity, the "Co-Agents").
RECITALS:
A. The Company, the Existing Banks (as hereinafter defined) and the
Existing Agent (as hereinafter defined) have entered into the Existing Credit
Agreement (as hereinafter defined), pursuant to which the Existing Banks
provided to the Company a revolving credit facility in the maximum aggregate
principal amount of $675,000,000.
B. The Company now desires to replace the existing revolving credit
facility under the Existing Credit Agreement with a new revolving credit
facility in an aggregate principal amount the Dollar Equivalent (as hereinafter
defined) of which does not exceed $575,000,000, including standby letters of
credit in an aggregate amount not exceeding $20,000,000, in order to provide
funds for its general corporate purposes.
C. The Banks are willing to provide such a replacement revolving
credit facility on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual promises
contained herein, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Certain Definitions. As used in this Agreement, and in any
certificate, report, other agreement or other document made or delivered
pursuant to this Agreement, the following terms shall have the following
respective meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined unless the context otherwise requires):
"Absolute Rate Dollar Bid-Option Loan" means a Loan which pursuant to the
applicable Notice of Borrowing is made at the Bid-Option Absolute Rate.
"Acquired Debt" means, with respect to any Person who becomes a Subsidiary
after the Closing Date, Debt of such Person which was outstanding before such
Person became a Subsidiary and which was not created in contemplation of such
Person becoming a Subsidiary.
"Additional Bank" shall have the meaning ascribed thereto in Section
11.13(b).
MASCOTECH, INC. CREDIT AGREEMENT
-1-
<PAGE> 8
"Adjusted Net Worth" means, as of any date, the sum of (a) Net Worth, plus
(b) the Deferred Trimas Gain, plus (or, if the amount determined pursuant to the
following clause (c) is negative, minus the absolute amount thereof, provided
that such amount, if subtracted, shall not exceed the amount determined pursuant
to clause (b) of this definition) (c) the amount equal to 33-1/3% of the
difference of (i) the aggregate Market Value of all shares of common stock of
Trimas owned by the Company on such date, minus (ii) the aggregate value at
which such common stock is carried on the Company's books on such date, plus (d)
an amount equal to the lesser of (i) the Deferred MSX Gain or (ii) $35,000,000.
"Affiliate", when used with respect to any Person, means any other Person
which, directly or indirectly, controls or is controlled by or is under common
control with such Person. For purposes of this definition, "control" (including
the correlative meanings of the terms "controlled by" and "under common control
with"), with respect to any Person, shall mean possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.
"Applicable Lending Office" means, as to any Bank, its Domestic Lending
Office, Eurodollar Lending Office or any other office of such Bank or of any
Affiliate of such Bank selected and notified to the Company and the Agent as the
applicable lending office for a particular Loan or type of Loan by such Bank;
provided that the Company shall not be responsible for the increase, if any, in
costs hereunder that (a) are due to any Bank changing its Applicable Lending
Office with respect to a particular Loan or type of Loan and (b) arise because
of circumstances existing at the time of such change.
"Applicable Margin" means, with respect to any Application Period for
Eurodollar Rate Syndicated Loans, CD Rate Loans, Facility Fees and Letters of
Credit, the percentage found in the applicable chart set forth on Schedule 1
attached hereto by reading down the column of Senior Leverage Ratio ranges to
the row for the range into which the Senior Leverage Ratio as of the relevant
Determination Date falls, and then reading across that row to the Interest
Coverage Ratio column for the range into which the Interest Coverage Ratio for
the relevant Determination Period falls. By way of example, if the Senior
Leverage Ratio as of the relevant Determination Date is 0.53:1.00 and the
Interest Coverage Ratio for the relevant Determination Period is 2.75:1.00, the
Applicable Margin for Eurodollar Rate Syndicated Loans during the Application
Period shall be 0.40%. For purposes of this definition of the term "Applicable
Margin", (a) the term "Application Period" means a period commencing with and
including the 60th day after the end of the most recently completed fiscal
quarter of the Company to and including the 59th day after the end of the next
following fiscal quarter of the Company, (b) the term "Determination Date"
means, with respect to any Application Period, the last day of the Determination
Period for such Application Period, (c) the term "Determination Period" means,
with respect to any Application Period, the period of four consecutive
fiscal quarters of the Company ending with the fiscal quarter ending
immediately preceding such Application Period, and (d) any change in the
Applicable Margin during any Interest Period for any Syndicated Loan shall be
effective as to such Syndicated Loan upon such change in the Applicable Margin
taking effect pursuant to this definition, but any change in the Applicable
Margin while any Letter of Credit is outstanding shall not be effective with
respect to such Letter of Credit for any quarterly period for which the fee for
such Letter of Credit has already been paid under Section 3.3(c). For purposes
of determining the Applicable Margin,
(i) if the proceeds resulting from all Stock Issuances, net of the cost of
all Stock Redemptions (other than any issuance or redemption, purchase,
retirement or other acquisition in connection with the Company's employee stock
award programs), or if the payments resulting from all Stock Redemptions, net of
the proceeds resulting from all Stock Issuances, within 45 days after a
Determination Date, exceed $10,000,000, the Senior Leverage Ratio shall be
calculated on a pro forma basis to reflect the effect of all Stock Issuances and
Stock Redemptions (other than any issuance or redemption, purchase retirement or
other acquisition in
MASCOTECH, INC. CREDIT AGREEMENT
-2-
<PAGE> 9
connection with the Company's employee stock award programs) and the
related application of proceeds or funding or payment thereof within such
45-day period; and
(ii) if the proceeds resulting from all Stock Issuances, net of the cost
of Stock Redemptions (other than any issuance or redemption, purchase,
retirement or other acquisition in connection with the Company's employee stock
awards programs), or if the payments resulting from all Stock Redemptions, net
of the proceeds resulting from all Stock Issuances, from the beginning of a
Determination Period through and including the 45th day after the end of such
Determination Period exceeds $10,000,000, the Interest Coverage Ratio for such
Determination Period shall be calculated on a pro forma basis as if each such
Stock Issuance and each such Stock Redemption (other than any issuance or
redemption, purchase, retirement or other acquisition in connection with the
Company's employee stock award programs) and the related application of proceeds
or funding or payment thereof had occurred on the first day of such
Determination Period.
Notwithstanding anything in this definition of "Applicable Margin" to the
contrary, if the Company has a Senior Debt Rating at any time, including at any
time prior to the end of an Application Period, the Applicable Margin shall
change on the date such Senior Debt Rating is effective such that the Applicable
Margin is (x) 0.25% for Eurodollar Rate Syndicated Loans and, subject to clause
(d) above, Letters of Credit, (y) 0.375% for CD Rate Loans and (z) 0.10% for
Facility Fees.
"Application Period" shall have the meaning ascribed thereto in the
definition of the term "Applicable Margin".
"Assignment and Acceptance" is defined in Section 11.6(d).
"Available Masco Corporation Funding Commitment" means, as of any date, any
unused and available amount of the "Commitment" of Masco Corporation under, and
as defined in, the Securities Purchase Agreement, provided that such amount for
purposes of this definition shall not exceed $100,000,000, provided that such
"Commitment" relates only to the purchase by Masco Corporation of equity
securities of the Company or of Subordinated Debt of the Company.
"Benefit Arrangement" means at any time an employee benefit plan within the
meaning of Section 3(3) of ERISA that is not a Plan or a Multiemployer
Plan and which is maintained or otherwise contributed to by the Company or any
ERISA Affiliate of the Company.
"Bid-Option Absolute Rate" means, with respect to any Absolute Rate Dollar
Bid-Option Loan or Foreign Currency Bid-Option Loan, the Bid-Option Absolute
Rate, as defined in Section 3.4(d)(ii)(D), that is offered for such Loan.
"Bid-Option Auction" means a solicitation of Bid-Option Quotes setting
forth Bid-Option Absolute Rates or Bid-Option Eurodollar Rate Margins, as the
case may be, pursuant to Section 3.4(b).
"Bid-Option Eurodollar Rate" means the sum of (a) the Bid-Option Eurodollar
Rate Margin plus (b) the Eurodollar Base Rate.
"Bid-Option Eurodollar Rate Margin" means, with respect to any Eurodollar
Rate Bid-Option Loan, the Bid-Option Eurodollar Rate Margin, as defined in
Section 3.4(d)(ii)(E), that is offered for such Loan.
"Bid-Option Interest Period" means (a) with respect to each Eurodollar Rate
Dollar Bid-Option Borrowing, the Eurodollar Rate Interest Period applicable
thereto, and (b) with respect to each Absolute Rate Dollar Bid-Option Borrowing
and Foreign Currency Bid-Option Borrowing, the period commencing on the
MASCOTECH, INC. CREDIT AGREEMENT
-3-
<PAGE> 10
date of such Borrowing and ending on the date elected by the Company in
the applicable Notice of Borrowing, which date shall be not less than 15 and
not more than 360 days after the date of such Borrowing; provided that:
(i) any such Interest Period that would otherwise end on a day that
is not a Business Day shall be extended to the next succeeding Business
Day; and
(ii) no such Interest Period that would end after the Scheduled
Expiration Date shall be permitted.
"Bid-Option Loan" means a Loan which is made by a Bank pursuant to a
Bid-Option Auction.
"Bid-Option Note" means a promissory note of the Company in substantially
the form of Exhibit B hereto evidencing the obligation of the Company to repay
Bid-Option Loans, as amended or modified from time to time and together with any
promissory note or notes issued in exchange or replacement therefor.
"Bid-Option Percentage" means, with respect to any Bank, the percentage of
the Dollar Equivalent of the aggregate outstanding principal amount of the
Bid-Option Loans of all the Banks represented by the Dollar Equivalent of the
outstanding principal amount of the Bid-Option Loans of such Bank.
"Bid-Option Quote" means an offer by a Bank to make a Bid-Option Loan in
accordance with Section 3.4(d).
"Bid-Option Quote Request" shall have the meaning ascribed thereto in
Section 3.4(b).
"Borrowing" means a borrowing hereunder consisting of Loans made to the
Company on a single date, at a single rate and for a single Interest Period. A
Borrowing may be referred to as a "Floating Rate Borrowing" if such Loans are
Floating Rate Loans, a "CD Rate Borrowing" if such Loans are CD Rate Loans, a
"Eurodollar Rate Syndicated Borrowing" if such Loans are Eurodollar Rate
Syndicated Loans, a "Dollar Bid-Option Borrowing" if such Loans are Dollar
Bid-Option Loans, a "Foreign Currency Bid-Option Borrowing" if such Loans are
Foreign Currency Bid-Option Loans, an "Absolute Rate Dollar Bid-Option
Borrowing" if such Loans are Absolute Rate Dollar Bid-Option Loans, a
"Eurodollar Rate Dollar Bid-Option Borrowing" if such Loans are Eurodollar Rate
Dollar Bid-Option Loans, or a "Eurodollar Rate Borrowing" if such Loans are
Eurodollar Rate Loans. CD Rate Borrowings and Eurodollar Rate Syndicated
Borrowings are sometimes collectively referred to as "Fixed Base Rate Syndicated
Borrowings"; Floating Rate Borrowings and Fixed Base Rate Syndicated Borrowings
are sometimes collectively referred to as "Syndicated Borrowings"; Absolute Rate
Dollar Bid-Option Borrowings and Eurodollar Rate Dollar Bid-Option Borrowings
are sometimes collectively referred to as "Dollar Bid-Option Borrowings"; Dollar
Bid-Option Borrowings and Foreign Currency Bid-Option Borrowings are sometimes
collectively referred to herein as "Bid-Option Borrowings"; and Fixed Base Rate
Syndicated Borrowings and Bid-Option Borrowings are sometimes collectively
referred to as "Fixed Rate Borrowings".
"Business Day" means any day on which commercial banks are open for
domestic and international business (including dealings in Dollar deposits) in
New York City and Detroit and, with respect to Eurodollar Rate Loans and the
related Interest Periods, in London, and with respect only to Foreign Currency
Bid-Option Loans and the related Interest Periods, on which dealings in deposits
in the relevant Foreign Currency are carried out in the relevant interbank
market and in the principal financial center of the country issuing the relevant
Foreign Currency.
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"Capital Expenditures" means, for any period, the aggregate amount of
capital expenditures of the Company and its Consolidated Subsidiaries during
such period, determined on a consolidated basis in accordance with generally
accepted accounting principles.
"Capital Lease" of any Person means any lease which, in accordance with
generally accepted accounting principles, is required to be capitalized on the
books of such Person.
"Cash and Cash Equivalents" means (a) all cash of the Company and its
Consolidated Subsidiaries on hand or on deposit, plus (b) cash equivalents as
determined in accordance with generally accepted accounting principles, plus (c)
all investments of the Company and its Consolidated Subsidiaries of the
following types, whether or not such investments are cash equivalents in
accordance with generally accepted accounting principles: (i) commercial paper
of any United States issuer having the highest rating then given by Moody's
Investors Service, Inc. or Standard & Poor's Corporation, (ii) direct
obligations of, and obligations fully guaranteed by, the United States of
America, and (iii) certificates of deposit of (A) any commercial bank which is a
member of the Federal Reserve System and which has capital, surplus and
undivided profits (as shown on its most recently published statement of
condition) aggregating not less than $100,000,000 or (B) any Bank, provided that
each of the foregoing investments has a maturity date not later than 180 days
after the date of acquisition thereof by the Company or any of its Consolidated
Subsidiaries.
"CD Base Rate" applicable to any CD Rate Interest Period means the per
annum rate that is equal to the sum of:
(a) the rate per annum obtained by dividing (i) the arithmetic mean of
secondary market bid rates per annum (expressed as a percentage) quoted at
approximately 10:00 a.m. New York time (or as soon thereafter as practicable) on
the first day of such Interest Period by two or more New York certificate of
deposit dealers of recognized standing selected by the Agent for the purchase
from the CD Reference Banks at face value of negotiable certificates of deposit
of the CD Reference Banks with a term comparable to such Interest Period in an
aggregate amount comparable to the related CD Rate Loans to be made by such CD
Reference Banks in their capacity as Banks hereunder, by (ii) an amount equal to
one minus the stated maximum rate (expressed as a decimal) of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) under any regulations of the Board of
Governors of the Federal Reserve System (or any successor agency thereto),
applicable on the first day of the related Interest Period to a negotiable
certificate of deposit of the bank that is the Agent with a term comparable to
such Interest Period in an aggregate amount comparable to the related CD Rate
Loan to be made by such bank in its capacity as a Bank hereunder, plus
(b) the annual assessment rate (expressed as a percentage) estimated by
the Agent on the first day of the related Interest Period to be payable by the
bank that is the Agent to the Federal Deposit Insurance Corporation (or any
successor agency thereto) for such Corporation's (or such successor's) insuring
Dollar deposits of such bank in the United States during the related Interest
Period;
all as conclusively determined, absent manifest error, by the Agent, such sum to
be rounded up, if necessary, to the nearest whole multiple of one one-hundredth
of one percent (1/100 of 1%).
"CD Rate" means, with respect to any CD Rate Loan for any CD Rate Interest
Period or portion thereof, the per annum rate that is equal to the sum of (a)
the Applicable Margin, plus (b) the CD Base Rate; which CD Rate shall change
simultaneously with any change in such Applicable Margin.
"CD Rate Interest Period" means, with respect to each CD Rate Borrowing,
the period commencing on the date of such CD Rate Borrowing and ending 30, 60,
90 or 180 days thereafter, as the Company may elect in the applicable Notice of
Borrowing, provided that:
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(a) any such Interest Period that would otherwise end on a day
that is not a Business Day shall be extended to the next succeeding
Business Day; and
(b) no such Interest Period that would end after the Scheduled
Expiration Date shall be permitted.
"CD Rate Loan" means a Loan which pursuant to the applicable Notice of
Borrowing is made at the CD Rate.
"CD Reference Bank" means each of The First National Bank of Chicago and
Morgan Guaranty Trust Company of New York, or such other CD Reference Banks as
may be appointed pursuant to Section 11.6.
"Closing Date" means the first day on which all the following shall have
occurred: (a) the Company has executed this Agreement and furnished all
documents required under Section 8.3, and all matters required under such
Section have been completed, (b) the Agent has received telexes or telecopies
affirming execution of this Agreement in counterparts by all the Banks, and (c)
the Agent has executed this Agreement. Subject to the second sentence of
Section 10.6, the Agent shall notify each party hereto of the occurrence of the
Closing Date on the date thereof.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations thereunder.
"Commitment" means, with respect to each Bank whose commitment has not been
terminated pursuant to Section 11.13, the commitment of such Bank to make
Syndicated Loans pursuant to Section 3.1 and to participate in the risk of
Letters of Credit pursuant to Section 3.3, in an aggregate principal amount the
Dollar Equivalent of which does not exceed (a) in the case of each Bank
originally a party hereto, the amount set forth opposite the name of such Bank
on the signature pages hereof, and (b) in the case of each Bank becoming a party
hereto in accordance with Section 11.6(d) or 11.13, the aggregate amount
assigned to it, in each case (i) less the aggregate amount, if any, subsequently
assigned by it in accordance with Section 11.6(d), (ii) plus the aggregate
amount, if any, subsequently assigned to it under Section 11.6(d) or 11.13 and
(iii) subject to activation pursuant to SectionE3.1, and as such amount may be
reduced from time to time pursuant to Section 3.8.
"Commitment Percentage" means, with respect to any Bank, the percent of the
aggregate amount of all the Commitments represented by the amount of such Bank's
Commitment.
"Consolidated" or "consolidated" refers to the consolidation of the
accounts of a Person and its Subsidiaries in accordance with generally accepted
accounting principles.
"Consolidated Subsidiary" of any corporation means any Subsidiary which
would be consolidated on the consolidated balance sheet of such corporation in
accordance with generally accepted accounting principles.
"Current Assets" means, at any time, the current assets of the Company and
its Consolidated Subsidiaries, determined as to amount and classification on a
consolidated basis in accordance with generally accepted accounting principles.
"Current Market Price" with respect to any shares of stock, means, as of
any day, the last reported sales price or, in the event that no sale takes place
on such day, the average of the reported closing bid and
MASCOTECH, INC. CREDIT AGREEMENT
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asked prices, in either case as reported on the New York Stock
Exchange, on the principal national securities exchange on which such stock is
listed or admitted to trading or, if not listed or admitted to trading on any
national securities exchange, by NASDAQ National Market System or, if such
stock is not quoted on such National Market System, the average of the closing
bid and asked prices on such day in the over-the-counter market as reported by
NASDAQ or, if bid and asked prices for such stock on such day shall not have
been reported through NASDAQ, the average of the closing bid and asked prices
on such day as furnished by any New York Stock Exchange member firm regularly
making a market in such security selected by the Agent.
"Debt" means: (a) indebtedness for money borrowed; (b) the capitalized
portion of lease rentals under Capital Leases; (c) other indebtedness incurred
in connection with the acquisition of any real or personal property, stock, debt
or other assets (to the extent that any of the foregoing acquisition
indebtedness is represented by any notes, bonds, debentures or similar evidences
of indebtedness); and (d) obligations in respect of obligations or indebtedness
of others of the types referred to in each of the foregoing clauses (a)-(c), for
the payment of which the Company or any Consolidated Subsidiary is directly or
contingently liable, or which is secured by any property of the Company or any
Consolidated Subsidiary (whether or not the Company or such Consolidated
Subsidiary is liable therefor).
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Deferred MSX Gain" means, as of any date, the remaining amount of the
liability or contra asset of the Company booked in connection with the transfer
of assets by the Company to MSX International on January 3, 1997, which amount
was approximately $40,000,000 as of January 3, 1997 and has not been recognized
as income to the Company.
"Deferred Trimas Gain" means, as of any date, the remaining amount of the
liability or contra asset of the Company booked in connection with the transfer
of assets by the Company to Trimas prior to the Closing Date, which amount was
approximately $63,520,000 as of December 31, 1996 and has not been recognized as
income to the Company.
"Determination Date" shall have the meaning ascribed thereto in the
definition of the term "Applicable Margin".
"Determination Period" shall have the meaning ascribed thereto in the
definition of the term "Applicable Margin".
"Dollar Bid-Option Loan" means a Bid-Option Loan made in Dollars.
"Dollar Bid-Option Percentage" means, with respect to any Bank and any
Dollar Bid-Option Borrowing, the percentage of the aggregate outstanding
principal amount of all the Dollar Bid-Option Loans comprising such Borrowing
represented by the outstanding principal amount of the Dollar Bid-Option Loan
made by such Bank as part of such Borrowing.
"Dollar Equivalent" means, as of any date, (a) with respect to any amount
of Dollars, the amount thereof, and (b) with respect to any amount of any
Foreign Currency, the amount of Dollars that could be purchased with such amount
of such Foreign Currency at the spot rate of exchange (except as provided in
Section 3.7(a)) quoted by the Agent at approximately 10:00 a.m. (Detroit time)
on such date or such number of Business Days before such date as may reasonably
be deemed necessary by the Agent for purposes of this Agreement.
"Dollars" and "$" shall mean the lawful money of the United States.
MASCOTECH, INC. CREDIT AGREEMENT
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"Domestic Lending Office" means, as to any Bank, its office identified on
the signature pages hereof as its Domestic Lending Office or such other office
as such Bank may hereafter designate as its Domestic Lending Office.
"Domestic Subsidiary" means a Subsidiary that is incorporated under the
laws of the United States of America or any State thereof.
"EBIT" means, for any period, Net Income, exclusive of any Non-Cash Special
Items, for such period plus, to the extent deducted in determining such Net
Income: (a) Interest Charges for such period, and (b) income and other taxes.
"EBITDA Minus Capital Expenditures" means, as of the end of any fiscal
quarter, the amount determined by subtracting (a) Capital Expenditures
calculated as follows: (i) for the fiscal quarter ended December 31, 1996,
Capital Expenditures for such fiscal quarter then ending and the three
immediately preceding fiscal quarters, (ii) for the fiscal quarter ending March
31, 1997, Capital Expenditures for such fiscal quarter then ending and the four
immediately preceding fiscal quarters times four-fifths, (iii) for the fiscal
quarter ending June 30, 1997, Capital Expenditures for such fiscal quarter then
ending and the five immediately preceding fiscal quarters times two-thirds, (iv)
for the fiscal quarter ending September 30, 1997, Capital Expenditures for such
fiscal quarter then ending and the six immediately preceding fiscal quarters
times four-sevenths and (v) for the fiscal quarter ending December 31, 1997 and
any fiscal quarter thereafter, Capital Expenditures for such fiscal quarter then
ending and the seven immediately preceding fiscal quarters times one-half, from
(b) the sum of EBIT for such fiscal quarter plus the three immediately preceding
fiscal quarters plus, to the extent deducted in determining such EBIT,
depreciation and amortization expense of the Company and its Consolidated
Subsidiaries; provided that when determining the Senior Debt Coverage Ratio for
purposes of Section 7.8, in the event the Company or any of its Consolidated
Subsidiaries acquires any corporation or business, EBITDA Minus Capital
Expenditures shall be calculated on a pro forma basis (which, to the extent
deemed reasonable to the Agent, may include as pro forma adjustments reasonable
eliminations of excess compensation (including salaries) and other adjustments
that are attributable to the change in ownership or management of the
corporation or business) as if the Company or such Consolidated Subsidiary had
owned the acquired corporation or business for the eight fiscal quarters
preceding its acquisition.
"Environmental Laws" means any and all applicable United States federal,
state and local statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements
and other governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations thereunder.
"ERISA Affiliate" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Company, are treated as a single employer under Section
414(b), (c) or (m), or the regulations prescribed under Section 414(o), of the
Code.
MASCOTECH, INC. CREDIT AGREEMENT
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"Eurodollar Base Rate" applicable to any Eurodollar Rate Interest Period
means the per annum rate obtained by dividing (a) the per annum rate of interest
at which deposits in Dollars for such Interest Period and in an aggregate amount
comparable to (i) in the case of Eurodollar Rate Syndicated Loans, the amount of
the related Eurodollar Rate Syndicated Loans to be made by the Eurodollar
Reference Banks in their capacity as Banks hereunder, and (ii) in the case of
Eurodollar Rate Dollar Bid-Option Loans, the aggregate amount of the Eurodollar
Rate Dollar Bid-Option Borrowing set forth in the related Bid-Option Quote
Request, are offered to the Eurodollar Reference Banks by other prime banks in
the London or Nassau interbank market, selected in the Eurodollar Reference
Banks' discretion, at approximately 11:00 a.m. London or Nassau time, as the
case may be, on the second Business Day prior to the first day of such
Eurodollar Rate Interest Period, by (b) an amount equal to one minus the stated
maximum rate (expressed as a decimal) of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves) that is specified on the first day of such Eurodollar Rate Interest
Period by the Board of Governors of the Federal Reserve System (or any successor
agency thereto) for determining the maximum reserve requirement with respect to
eurocurrency funding (currently referred to as "Eurocurrency liabilities" in
Regulation D of such Board) maintained by a member bank of such System; all as
conclusively determined, absent manifest error, by the Agent, such sum to be
rounded up, if necessary, to the nearest whole multiple of one-hundredth of one
percent (1/100 of 1%).
"Eurodollar Lending Office" means, as to any Bank, its office identified on
the signature pages hereof as its Eurodollar Lending Office or such other branch
(or Affiliate) of such Bank as such Bank may hereafter designate as its
Eurodollar Lending Office.
"Eurodollar Rate Dollar Bid-Option Loan" means a Loan which pursuant to the
applicable Notice of Borrowing is made at the Bid-Option Eurodollar Rate.
"Eurodollar Rate Interest Period" means, with respect to each Eurodollar
Rate Syndicated Loan, the period commencing on the date of such Eurodollar Rate
Syndicated Loan and ending one month, two months, three months, four months,
five months or six months thereafter, or twelve months if such proposed
twelve-month Eurodollar Rate Interest Period is specifically agreed to by all
Banks, and with respect to each Eurodollar Rate Dollar Bid-Option Loan, the
period commencing on the date of such Eurodollar Rate Dollar Bid-Option Loan and
ending on a date between fifteen days and twelve months thereafter, as the
Company may request in the applicable Notice of Borrowing; provided that:
(a) any such Interest Period that would otherwise end on a day
that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month in
which case such Interest Period shall end on the next preceding Business
Day;
(b) any such Interest Period that begins on the last Business Day
of a calendar month or on a day for which there is no numerically
corresponding day in the calendar month during which such Eurodollar
Interest Period is to end shall end on the last Business Day of such
calendar month; and
(c) no such Interest Period that would end after the Scheduled
Expiration Date shall be permitted.
"Eurodollar Rate Loan" means any Eurodollar Rate Dollar Bid-Option Loan or
Eurodollar Rate Syndicated Loan.
"Eurodollar Rate Syndicated Loan" means a Loan which pursuant to the
applicable Notice of Borrowing is made at the Syndicated Eurodollar Rate.
MASCOTECH, INC. CREDIT AGREEMENT
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"Eurodollar Reference Bank" means the principal London office of each of
The First National Bank of Chicago and Morgan Guaranty Trust Company of New
York, or such other Eurodollar Reference Banks as may be appointed pursuant to
Section 11.6.
"Events of Default" has the meaning ascribed thereto in Section 9.1.
"Existing Agent" means NBD Bank, a Michigan banking corporation, formerly
known as NBD Bank, N.A., in its capacity as agent for the Existing Banks.
"Existing Banks" means the banks that are parties to the Existing Credit
Agreement.
"Existing Bid-Option Loans" means the "Bid-Option Loans" (as defined in the
Existing Credit Agreement) outstanding on the Closing Date.
"Existing Commitment" means, with respect to each Bank, the amount, if any,
of such Bank's "Commitment" (as defined in the Existing Credit Agreement)
immediately prior to the Closing Date.
"Existing Credit Agreement" means the Credit Agreement dated as of
September 2, 1993, among the Company, the Existing Banks and the Existing Agent,
as amended, supplemented or otherwise modified, and as in force immediately
prior to the Closing Date.
"Existing Debt" shall have the meaning ascribed thereto in the definition
of the term "Senior Debt".
"Existing Loans" means the "Loans" (as defined in the Existing Credit
Agreement) outstanding under the Existing Credit Agreement on the Closing Date.
"Facility Fees" means the facility fees payable pursuant to Section 3.7(b).
"Federal Funds Rate" means, as of any day, the per annum rate that is equal
to the average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers,
as published by the Federal Reserve Bank of New York for such day (or, in the
case of any day on which the federal funds market is not open, for the
immediately preceding day on which it was open), or, if such rate is not so
published for any day (or, in the case of any day on which the federal funds
market is not open, for the immediately preceding day on which it was open),
the average of the quotations for such rates received by the Agent from three
federal funds brokers of recognized standing selected by the Agent in its
discretion; all as conclusively determined, absent manifest error, by the
Agent, such average to be rounded up, if necessary, to the nearest whole
multiple of one-hundredth of one percent (1/100 of 1%); which Federal Funds
Rate shall change simultaneously with any change in such published or quoted
rates.
"Fixed Base Rate Syndicated Loan" means any CD Rate Loan or Eurodollar Rate
Syndicated Loan.
"Fixed Rate Loan" means any Fixed Base Rate Syndicated Loan or Bid-Option
Loan.
"Floating Rate" means, with respect to any Floating Rate Loan, the greater
of (a) the Prime Rate and (b) the per annum rate equal to the sum of (i)
one-half percent (1/2%) plus (ii) the Federal Funds Rate; which Floating Rate
shall change simultaneously with any change in such Prime Rate or Federal Funds
Rate, as the case may be.
"Floating Rate Interest Period" means, with respect to each Floating Rate
Borrowing, the period commencing on the date of such Floating Rate Borrowing and
ending 30 days thereafter; provided that:
MASCOTECH, INC. CREDIT AGREEMENT
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(a) any such Interest Period that would otherwise end on a day
that is not a Business Day shall be extended to the next succeeding
Business Day; and
(b) no Interest Period that would end after the Scheduled
Expiration Date shall be permitted.
"Floating Rate Loan" means a Loan which pursuant to the applicable Notice
of Borrowing is made at the Floating Rate.
"Foreign Currency" means any currency (other than Dollars) freely
convertible into Dollars and freely transferable, which the Company designates
in any Bid-Option Quote Request with respect to any Foreign Currency Bid-Option
Borrowing as the currency in which the related Loans are to be made.
"Foreign Currency Bid-Option Loan" means a Bid-Option Loan made in a
Foreign Currency.
"Foreign Currency Bid-Option Percentage" means, with respect to any Bank
and any Foreign Currency Bid-Option Borrowing, the percentage of the aggregate
outstanding principal amount of all the Foreign Currency Bid-Option Loans
comprising such Borrowing represented by the outstanding principal amount of the
Foreign Currency Bid-Option Loan made by such Bank as part of such Borrowing.
"Funded Debt" means all Debt of the Company and its Consolidated
Subsidiaries which by its terms matures more than twelve months from the date
such Debt was incurred or assumed by the Company or any such Consolidated
Subsidiary, as the case may be, or which by its terms matures less than
twelve months from such date but by its terms is renewable or extendable at the
option of the Company or any such Consolidated Subsidiary beyond twelve months
from such date, including, without limitation, all Loans under this Agreement
(including those made within twelve months of the Scheduled Expiration Date).
"Interest Charges" means, for any period, the sum of interest that is
expensed (or, under generally accepted accounting principles, would be expensed)
during such period by the Company and its Consolidated Subsidiaries on Debt of
the Company and its Consolidated Subsidiaries.
"Interest Coverage Ratio" means, for any Determination Period, the ratio of
(a) EBIT to (b) Interest Charges.
"Interest Payment Date" means, with respect to each Loan, the last day of
each Interest Period with respect to such Loan and, in the case of any Interest
Period exceeding (a) with respect to Eurodollar Rate Loans, three months or (b)
with respect to CD Rate Loans and Absolute Rate Dollar Bid-Option Loans, ninety
days, those days that occur during such Interest Period at intervals of three
months and ninety days, respectively, after the first day of such Interest
Period.
"Interest Period" means any Floating Rate Interest Period, CD Rate Interest
Period, Eurodollar Rate Interest Period or Bid-Option Interest Period.
"Investment" by any Person means the purchase or other acquisition of any
capital stock of or other ownership interest in, or debt securities of or other
evidences of indebtedness of, any other Person, or the making of a loan or
advancing of any funds or property or making of any other extension of credit
to, or the making of any investment or acquiring any interest whatsoever in, any
other Person, or the satisfaction of any contingent liability, as obligor,
guarantor, surety or in any other capacity, for obligations of any other Person;
provided, however, that the term Investment shall not include any evidence of
indebtedness, any account
MASCOTECH, INC. CREDIT AGREEMENT
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receivable or any obligation or indebtedness on open account which, in
all of the foregoing cases, arises directly from the sale of goods or
merchandise or services for fair value in the ordinary course of business.
"Invitation for Bid-Option Quotes" means an Invitation for Bid-Option
Quotes in the form referred to in Section 3.4(c).
"Letter of Credit" shall mean a standby letter of credit issued for the
account of the Company or any of its Consolidated Subsidiaries pursuant to this
Agreement.
"Letter of Credit Documents" shall have the meaning ascribed thereto in
Section 3.3(f).
"Letter of Credit Issuance" shall mean any issuance by the Agent of a
Letter of Credit pursuant to Section 3.3.
"Letter of Credit Obligations Amount" means, as of any date, the amount
equal to the sum of (a) the maximum aggregate amount available to be drawn under
all outstanding Letters of Credit at any time on or before the stated expiry
date thereof, plus (b) the amount of any draws under all Letters of Credit that
have not been reimbursed as provided in Section 3.3(e).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
security interest or similar encumbrance in respect of such asset; provided that
a subordination agreement shall not be deemed to create a Lien. For the
purposes of this Agreement, the Company or any Consolidated Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
Capital Lease or other similar title retention agreement relating to such asset.
"Loan" means any Syndicated Loan or Bid-Option Loan.
"Market Value" with respect to any shares of stock, means, as of any date,
the average of the Current Market Prices of such shares for the thirty
consecutive trading days ending with such date.
"Masco Corporation" means Masco Corporation, a Delaware corporation.
"Masco Group" means Masco Corporation or any Person who, on the date
hereof, is an Affiliate of Masco Corporation or who hereafter becomes an
Affiliate controlled by Masco Corporation.
"Maximum Allowed Senior Debt Coverage Ratio" has the meaning ascribed
thereto in Section 7.8.
"Minority Interest Cash Investments" means, as of any date, the greater of
(a) $0 or (b) the Dollar Equivalent (such Dollar Equivalent to be determined
with respect to any Investment as of the time such Investment is made) of the
aggregate amount of Cash and Cash Equivalents used by the Company after January
1, 1997 for Investments (other than the Investment in MSX International on
January 3, 1997 (in the approximate amount of $70,000,000)) with respect to
Persons in which the Company owns less than 50% of the capital stock or other
ownership interests of such Persons, provided that such capital stock or other
ownership interests are accounted for by the Company on the equity method as of
such date, and provided, further, that such aggregate amount shall be adjusted
as follows: (i) the Dollar Equivalent of Cash and Cash Equivalents received by
the Company from the disposition of any such Investments (whether or not
accounted for on the equity method at the time of disposition) made since
January 1, 1997 shall be subtracted from such aggregate amount, and (ii) the
Dollar Equivalent of the aggregate amount of Cash and Cash Equivalents received
by the Company from the disposition of any such Investments (whether or not
accounted for on the equity method at the time of disposition) made on or prior
to January 1, 1997 (other than
MASCOTECH, INC. CREDIT AGREEMENT
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any Investments in or relating to Trimas) in excess of the book value
of such Investments shall be subtracted from such aggregate amount. For
purposes of clauses (i) and (ii) above, the Dollar Equivalent of any Cash and
Cash Equivalent shall be determined as of the time such Cash and Cash
Equivalent is received by the Company. Notwithstanding anything herein to the
contrary, the Company may exclude any Investment which would otherwise be
included in this definition of Minority Interest Cash Investments provided that
the difference of the Dollar Equivalent of the Cash and Cash Equivalents of all
such excluded Investments minus the Dollar Equivalent of the Cash and Cash
Equivalents received by the Company from the disposition of all such excluded
Investments in the aggregate is less than $5,000,000.
"Moody's" means Moody's Investors Service, Inc. or any successor thereto.
Any rating or change in rating given by Moody's shall be deemed effective, and
in effect, when publicly announced by Moody's.
"MSX International" shall mean MSX International, Inc., a Delaware
corporation.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which the Company or any
ERISA Affiliate is then making, or, pursuant to an applicable collective
bargaining agreement, accruing an obligation to make contributions or has within
the preceding five plan years made contributions, including for these purposes
any Person which ceased to be an ERISA Affiliate during such five-year period.
"Net Income" means, for any period, the greater of (a) $0, and (b) the
consolidated net income of the Company and its Consolidated Subsidiaries (after
deduction for income and other taxes of the Company and its Consolidated
Subsidiaries determined by reference to income or profits of the Company and its
Consolidated Subsidiaries) for such period, all as determined in accordance with
generally accepted accounting principles.
"Net Income Minus Preferred Dividends" means, for any period, the greater
of (a) $0, and (b) the excess of (i) Net Income for such period over (ii) the
aggregate amount of all dividends in respect of any preferred stock of the
Company accrued by the Company during such period.
"Net Worth" means, as of any date, (a) the amount of total shareholders'
equity of the Company and its Consolidated Subsidiaries on such date, determined
on a consolidated basis in accordance with generally accepted accounting
principles, minus (or, if the amount determined pursuant to the following clause
(b) is negative, plus the absolute amount thereof) (b) to the extent included in
total shareholders' equity the amount of the foreign currency translation
adjustment account, plus (c) the amount of the foreign currency translation
adjustment account shown on the consolidated balance sheet of the Company and
its Consolidated Subsidiaries dated December 31, 1992, which amount is
$6,050,000.
"New Debt" shall have the meaning ascribed thereto in the definition of the
term "Senior Debt".
"Non-Cash Special Items" means non-recurring or extraordinary, non-cash
gains or losses or other items affecting income, including, but without
limitation, the cumulative effect of any accounting changes.
"Note" means any Syndicated Note or Bid-Option Note.
"Notice of Bid-Option Borrowing" shall have the meaning ascribed thereto in
Section 3.4(f).
"Notice of Borrowing" means any Notice of Syndicated Borrowing or Notice of
Bid-Option Borrowing.
"Notice of Syndicated Borrowing" shall have the meaning ascribed thereto in
Section 3.2.
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"Overdue Rate" means (a) in respect of the principal of any Loan, the rate
per annum that is equal to the sum of one percent (1%) per annum plus the per
annum rate otherwise applicable to such Loan until the end of the then current
Interest Period for such Loan and, thereafter, a rate per annum that is equal to
the sum of one percent (1%) per annum plus the Floating Rate; and (b) in respect
of other amounts payable by the Company hereunder (other than interest), a per
annum rate that is equal to the sum of one percent (1%) per annum plus the
Floating Rate.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, corporation, partnership, joint venture,
trust, association, limited liability company or unincorporated organization, or
a government or any agency or political subdivision thereof.
"Plan" means at any time any employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and either (a) is
maintained, or contributed to, by the Company or any ERISA Affiliate for
employees of the Company or any ERISA Affiliate, or (b) has at any time within
the preceding five years been maintained, or contributed to, by the Company or
any Person which was at such time an ERISA Affiliate for employees of the
Company or any Person which was at such time an ERISA Affiliate.
"Prime Rate" means the per annum rate of interest publicly announced by NBD
Bank at its main office in Detroit from time to time as its "prime rate", it
being understood that such announced rate may not be the lowest rate of interest
charged by NBD Bank to any of its customers; which Prime Rate shall change
simultaneously with any change in such announced rate.
"Reference Bank" means any CD Reference Bank or Eurodollar Reference Bank.
"Refunded" shall have the meaning ascribed thereto in the definition of
the term "Senior Debt".
"Refunding Borrowing" means a Borrowing which, after application of the
proceeds of such Borrowing, results in no net increase in the Dollar Equivalent
of the aggregate outstanding principal amount of the Loans made by any Bank.
"Reimbursement Amount" shall have the meaning ascribed thereto in Section
3.3(e).
"Relevant Day" shall have the meaning ascribed thereto in the definition of
the term "Senior Debt Coverage Ratio".
"Request for Letter of Credit Issuance" shall have the meaning ascribed
thereto in Section 3.3(b).
"Required Banks" means Banks having not less than 51% of the aggregate
amount of the Commitments or, if the Commitments have terminated, Banks holding
Notes evidencing not less than 51% of the aggregate unpaid principal amount of
the Loans.
"Restricted Transfer" has the meaning ascribed thereto in Section 7.11(b).
"S&P" means Standard & Poor's Ratings Group or any successor thereto. Any
rating or change in rating given by S&P shall be deemed effective, and in
effect, when publicly announced by S&P.
MASCOTECH, INC. CREDIT AGREEMENT
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"Scheduled Expiration Date" means February 28, 2002; provided that, if and
only if the requirements of Section 3.10 are satisfied, the "Scheduled
Expiration Date" shall be extended to February 28, 2003.
"Securities Purchase Agreement" means the Amended and Restated Securities
Purchase Agreement dated as of November 23, 1993, as amended by that certain
Amendment No. 1 to Amended and Restated Securities Purchase Agreement made as of
October 31, 1996, between the Company and Masco Corporation, as in effect on the
Closing Date in the form attached hereto as Exhibit J, and as heretofore or
hereafter amended, supplemented or otherwise modified from time to time.
Nothing in this Agreement shall prohibit the Company and Masco Corporation from
amending or terminating such Securities Purchase Agreement, provided that at the
time of such amendment or termination, and immediately after giving effect
thereto, no Default exists or would exist.
"Senior Debt" means all Debt of the Company and its Consolidated
Subsidiaries, determined on a consolidated basis, except Subordinated Debt,
provided that, for purposes of this definition, if any Debt ("Existing Debt") is
to be Refunded (as hereinafter defined) with the proceeds of other money
borrowed ("New Debt"), the Existing Debt to be so Refunded shall be excluded
from Senior Debt when the New Debt is incurred. For purposes of this
definition, Existing Debt is to be "Refunded" by New Debt if, and to the extent
that, (i) no later than five (5) Business Days after the New Debt is incurred,
the Company delivers to the Agent written notice stating that the purpose of
such New Debt is to refund Existing Debt and specifying the Existing Debt to be
refunded, (ii) the proceeds of such New Debt are held in the form of Cash and
Cash Equivalents (free of any Lien except a Lien securing the specified Existing
Debt to be refunded and no other indebtedness or obligations) until such
specified Existing Debt is repaid and (iii) such specified Existing Debt is
repaid within 45 (forty-five) days after the New Debt is incurred.
"Senior Debt Coverage Ratio" means, at any time from and including the 31st
day (the "Relevant Day") after the last day of any fiscal quarter of the Company
to but excluding the 31st day of the following fiscal quarter of the Company,
the ratio of (a) Senior Debt as of the end of such fiscal quarter to (b) EBITDA
Minus Capital Expenditures as of the end of such fiscal quarter.
"Senior Debt Rating" means, at any date, that the senior unsecured
unenhanced long term debt of the Company is rated BBB or better by S&P or Baa2
or better by Moody's, regardless of whether the Company has any such debt
outstanding.
"Senior Leverage Ratio" means, as of any Determination Date, the ratio of
(a) the difference of (i) Senior Debt minus (ii) Cash and Cash Equivalents in
excess of $50,000,000 (exclusive of any Cash and Cash Equivalents constituting
or acquired with the proceeds of New Debt to the extent the specified Existing
Debt to be Refunded with such New Debt remains outstanding), to (b) Tangible
Capital Funds.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X under the Securities
Exchange Act of 1934.
"Stock Issuance" means any issuance by the Company of, or any conversion of
Subordinated Debt or any other Debt or liability of the Company or any of its
Consolidated Subsidiaries to, common or other capital stock or other equity
securities of the Company.
"Stock Redemptions" means any redemption, purchase, retirement or other
acquisition by the Company of any common or other capital stock or other equity
securities of the Company.
"Subordinated Debt" means, without duplication, (a) all Debt now
outstanding or hereafter created, issued, guaranteed, incurred or assumed by the
Company which is subordinated to payment of principal, premium, if any, and
interest on the Notes by provisions not less favorable in any material respect
to the
MASCOTECH, INC. CREDIT AGREEMENT
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holders of the Notes than the provisions set forth on Exhibit O; (b) Debt
evidenced by the Company's 4-1/2% Convertible Subordinated Debentures due 2003,
in the original principal amount of $345,000,000 and (c) Debt hereafter issued
pursuant to the Securities Purchase Agreement; provided, however, that any of
such Debt shall cease to be "Subordinated Debt" upon and to the extent of the
Company's repurchase or redemption of such Debt as permitted hereunder or the
Company's transfer, conveyance, assignment or delivery to any trustee, paying
agent or other fiduciary for the benefit of the holder(s) of such Debt of any
cash, securities or other assets of the Company in payment or on account of, or
as provision for, the principal of such Debt; provided further, however, that
any of such Debt referred to in clauses (b) and (c) of this definition shall
cease to be "Subordinated Debt" upon any amendment or other modification to the
Debentures referred to in such clause (b) evidencing such Debt, relating to the
subordination thereof, unless, in any such case, the provisions of such
Debentures after giving effect to such amendment or modification are not less
favorable in any material respect to the holders of the Notes than the
provisions set forth on Exhibit O.
"Subsidiary" of any Person means (a) any limited partnership (whether now
existing or hereafter organized) of which such Person or another Subsidiary of
such Person is the general partner, (b) any general partnership or limited
liability company (whether now existing or hereafter organized) of which such
Person or one or more of the other Subsidiaries of such Person own at least a
majority of the ownership or membership interests and (c) any corporation
(whether now existing or hereafter organized or acquired) in which (other than
directors' qualifying shares required by law) at least a majority of the
securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency), at the time as of which any determination is being made, is owned,
beneficially and of record, by such Person or by one or more of the other
Subsidiaries of such Person or by any combination thereof. Unless the context
otherwise requires, references to "Subsidiary" or "Subsidiaries" herein refer to
the Company's Subsidiaries.
"Substantially-Owned Consolidated Subsidiary" of any corporation means any
Consolidated Subsidiary of such corporation 90% or more of the shares of capital
stock (or other ownership interests) of which having ordinary power to vote in
elections for the board of directors (or other persons performing similar
functions at the time) are directly or indirectly owned by such corporation.
"Substitute Loan" means any Loan made by a Bank pursuant to Section 5.4.
"Syndicated Eurodollar Rate" means, with respect to any Eurodollar Rate
Syndicated Loan for any Eurodollar Rate Interest Period or portion thereof, the
per annum rate that is equal to the sum of (a) the Applicable Margin, plus (b)
the Eurodollar Base Rate; which Syndicated Eurodollar Rate shall change
simultaneously with any change in such Applicable Margin.
"Syndicated Loan" means any Floating Rate Loan or Fixed Base Rate
Syndicated Loan.
"Syndicated Note" means a promissory note of the Company substantially in
the form of Exhibit A hereto evidencing the obligation of the Company to repay
Syndicated Loans, as amended or modified from time to time and together with any
promissory note or notes issued in exchange or replacement therefor.
"Tangible Capital Funds" means, as of any date, the sum of (a) Adjusted Net
Worth, minus (b) the net book value of goodwill (the excess of cost over net
assets of acquired companies) included in the assets of the Company and its
Consolidated Subsidiaries on a consolidated basis, plus (c) the amount of all
Subordinated Debt which by its terms matures at least thirty days after the then
existing Scheduled Expiration Date, plus (d) the Available Masco Corporation
Funding Commitment minus (e) Minority Interest Cash Investments; provided,
however, that for purposes of this definition, no Debt of the type described in
clause (d) of the definition of the term "Debt" shall be included in
Subordinated Debt.
MASCOTECH, INC. CREDIT AGREEMENT
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"Termination Date" means the earlier to occur of (a) the Scheduled
Expiration Date and (b) the date on which the Commitments shall be terminated
pursuant to Section 3.8 or 9.1.
"Total Borrowed Funds" means, as of any date, all indebtedness of the
Company and its Consolidated Subsidiaries for money borrowed, determined on a
consolidated basis in accordance with generally accepted accounting principles,
provided that, for purposes of this definition, if any money borrowed ("Existing
Borrowed Funds") is to be Refunded (as hereinafter defined) with the proceeds of
other money borrowed ("New Borrowed Funds"), the Existing Borrowed Funds to be
so Refunded shall be excluded from Total Borrowed Funds when the New Borrowed
Funds are incurred. For purposes of this definition, Existing Borrowed Funds
are to be "Refunded" by New Borrowed Funds if, and to the extent that, (i) no
later than 5 Business Days after the New Borrowed Funds are incurred, the
Company delivers to the Agent written notice stating that the purpose of such
New Borrowed Funds is to refund Existing Borrowed Funds and specifying the
Existing Borrowed Funds to be refunded, (ii) the proceeds of such New Borrowed
Funds are held in the form of Cash and Cash Equivalents (free of any Lien except
a Lien securing the specified Existing Borrowed Funds to be refunded and no
other indebtedness or obligations) until such specified Existing Borrowed Funds
are repaid and (iii) such specified Existing Borrowed Funds are repaid within 45
days after the New Borrowed Funds are incurred.
"Total Leverage Ratio" means the ratio of (a) Total Borrowed Funds to (b)
Adjusted Net Worth.
"Trimas" means TriMas Corporation, a Delaware corporation.
"Unfunded Benefit Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (a) the present value of all vested nonforfeitable
benefits under such Plan exceeds (b) the fair market value of all Plan assets
allocable to such benefits (excluding any accrued but unpaid contributions), all
determined as of the then most recent valuation date for such Plan, but only to
the extent that such excess represents a potential liability of the Company or
any ERISA Affiliate to the PBGC or any other Person under Title IV of ERISA.
1.2 Accounting Terms. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with generally accepted accounting
principles as in effect from time to time, on a basis consistent, to
the extent required by such principles, with the most recent audited
consolidated financial statements of the Company and its Consolidated
Subsidiaries filed with the Securities and Exchange Commission on Form 10-K and
delivered to the Banks prior to the Closing Date; provided that, if the Company
notifies the Agent that the Company wishes to amend any covenant in Article VII
to eliminate the effect of any change in generally accepted accounting
principles in the operation of such covenant (or if the Agent notifies the
Company that the Required Banks wish to amend Article VII for such purpose),
then the Company's compliance with such covenant shall be determined on the
basis of generally accepted accounting principles in effect immediately before
the relevant change in generally accepted accounting principles became
effective, until either such notice is withdrawn or such covenant is amended in
a manner satisfactory to the Company and the Required Banks. Without limiting
the foregoing, all transfers of receivables shall be recognized as sales, and
not as Debts or Liens, if they would be recognized as sales in accordance with
generally accepted accounting principles, provided that all probable
adjustments in connection with the recourse provisions are accrued, all as more
specifically described in Statement of Financial Accounting Standards No. 125.
1.3 Other Definitions; Rules of Construction. As used herein, the
terms "Agent", "Bank", "Banks", "Co-Agent", "Company" and "this Agreement" shall
have the respective meanings ascribed thereto in the introductory paragraph of
this Agreement. Use of the terms "herein", "hereof" and "hereunder" shall be
MASCOTECH, INC. CREDIT AGREEMENT
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deemed references to this Agreement in its entirety and not solely to the
Section or clause in which such term appears. Unless otherwise specified
herein, references to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement.
Except as provided in the definition of Eurodollar Rate Interest Period, if any
payment, report, financial statement, notice or other obligation is due
hereunder on a day which is not a Business Day, then the due date thereof shall
be extended to the next Business Day.
ARTICLE II.
TERMINATION OF EXISTING CREDIT AGREEMENT
2.1 Termination. The Company and the Banks acknowledge and agree that
the Existing Commitment of each Existing Bank is hereby terminated. Each
Existing Bank that is a party hereto shall cancel all Existing Notes held by it
and return them to the Company promptly after all amounts payable thereunder
have been paid in full. Notwithstanding the foregoing, the Company and each of
the Banks acknowledge and agree that each Existing Bid-Option Loan shall
continue with its existing principal amount, interest rate and Interest Period,
except that each Existing Bid-Option Loan shall be deemed a Bid-Option Loan
under this Agreement and shall be governed by the provisions of this Agreement.
ARTICLE III.
THE LOANS AND LETTER OF CREDIT ISSUANCES
3.1 Syndicated Borrowings. Each Bank agrees, for itself only, subject
to the terms and conditions set forth in this Agreement, to make Syndicated
Loans to the Company from time to time from the Closing Date to but excluding
the Termination Date; provided that the aggregate outstanding principal amount
of such Bank's Syndicated Loans shall not at any time exceed the excess of (a)
the amount of its Commitment, over (b) the sum of (i) its Commitment Percentage
of the Letter of Credit Obligations Amount plus (ii) its Commitment Percentage
of the Dollar Equivalent of the aggregate outstanding principal amount of all
Bid-Option Loans made by the Banks. Each Fixed Base Rate Syndicated Borrowing
shall be in an aggregate principal amount of $10,000,000 or any larger multiple
of $5,000,000 and each Floating Rate Borrowing shall be in an aggregate
principal amount of $5,000,000 or any larger multiple of $5,000,000; provided
that any such Borrowing may be in the aggregate amount of the unused
Commitments. Each Syndicated Borrowing shall be made by the several Banks
ratably in accordance with their respective Commitment Percentages. Within the
foregoing limits, the Company may borrow Loans from each Bank under this Section
3.1, repay such Loans, prepay such Loans to the extent permitted or required by
this Agreement and reborrow under this Section 3.1. Default by any Bank with
respect to its obligations hereunder shall not excuse any non-performance by any
other Bank, provided that no Bank shall be liable for the non-performance by any
other Bank of its obligations hereunder.
3.2 Notice of Syndicated Borrowings. The Company shall give the Agent
written notice in substantially the form attached hereto as Exhibit C (a "Notice
of Syndicated Borrowing") (a) not later than 12:00 p.m. (Detroit time) on the
Business Day of each Floating Rate Borrowing, and (b) not later than 11:00 a.m.
(Detroit time) on (i) the second Business Day before each CD Rate Borrowing, and
(ii) the third Business Day before each Eurodollar Rate Syndicated Borrowing,
specifying:
MASCOTECH, INC. CREDIT AGREEMENT
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(A) the date of such Borrowing, which shall be a Business
Day,
(B) the aggregate amount of such Borrowing,
(C) whether the Loans comprising such Borrowing are to be
Floating Rate Loans, CD Rate Loans or Eurodollar Rate Syndicated
Loans, and
(D) in the case of each Fixed Base Rate Syndicated
Borrowing, the duration of the Interest Period applicable thereto,
which shall comply with the provisions of the definition of the
applicable Interest Period.
3.3 Letters of Credit.
(a) Subject to the terms and conditions set forth in this
Agreement, the Agent agrees to issue, and each Bank further agrees for itself
only to participate in the risk of, Letters of Credit from time to time from the
Closing Date to but excluding the Termination Date; provided that the Letter of
Credit Obligations Amount shall not at any time exceed the lesser of (i)
$20,000,000 and (ii) the excess of (A) the aggregate amount of the Commitments
over (B) the aggregate outstanding principal amount of all Loans. No Letter of
Credit shall have a stated expiry date earlier than 30 days after the date of
its issuance, and no Letter of Credit shall have a stated expiry date or, if by
its terms it is periodically renewable, be subject to being terminated by the
Agent (unless renewal is permitted by the Agent in its sole discretion, in which
case the Agent will not permit renewal to a date beyond that determined in
accordance with the following portion of this sentence), later than the earlier
of (i) the one year anniversary of its issuance (or, if renewable and renewal
has been permitted, the one year anniversary of its last renewal) and (ii) the
fifth Business Day before the Scheduled Expiration Date. Each Letter of Credit
shall be in a minimum amount of $1,000,000. Subject to the terms and conditions
set forth in this Agreement, the Agent shall, on the date any Letter of Credit
is requested to be issued, issue the related Letter of Credit for the pro rata
risk of the Banks. Notwithstanding anything herein to the contrary, the Agent
may decline to issue any Letter of Credit if the beneficiary or the conditions
of drawing are reasonably unacceptable to the Agent, or if the purpose of
issuance is illegal or is in contravention of any law, rule, regulation or
public policy or any judgment, decree, writ, injunction, order or award of any
arbitrator, court or governmental authority.
(b) The Company shall give the Agent written notice in
substantially the form attached hereto as Exhibit D (a "Request for Letter of
Credit Issuance") not later than 10:00 a.m. (Detroit time) on the fifth Business
Day before each requested Letter of Credit Issuance or such later time as is
acceptable to the Agent.
(c) The Company agrees (i) to pay to the Agent for the account of
the Banks a fee computed at the per annum rate equal to the Applicable Margin of
the maximum amount available to be drawn from time to time under the related
Letter of Credit for the period from and including the date of such Letter of
Credit Issuance to but excluding the stated expiry date of such Letter of
Credit, and (ii) to pay an additional fee to the Agent for its own account
computed at the rate of one-eighth of one percent (1/8 of 1%) per annum of such
maximum amount for such period, such fees with respect to any Letter of Credit
to be paid quarterly in advance commencing with the date of its issuance, based
upon the Applicable Margin in effect at the beginning of each such quarter.
Such fees are nonrefundable and the Company shall not be entitled to any rebate
of any portion thereof if such Letter of Credit does not remain outstanding
through such quarter or for any other reason. The Company further agrees to pay
to the Agent, on demand, such other customary administrative fees, charges and
expenses of the Agent in respect of the issuance, negotiation,
MASCOTECH, INC. CREDIT AGREEMENT
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acceptance, amendment, transfer and payment of such Letter of Credit or
otherwise payable pursuant to the application and related documentation under
which such Letter of Credit is issued.
(d) Nothing in this Agreement shall be construed to require or
authorize any Bank to issue any Letter of Credit, it being recognized that the
Agent has the sole obligation under this Agreement to issue Letters of Credit
for the risk of the Banks. Upon each Letter of Credit Issuance, each Bank shall
automatically acquire a pro rata risk participation interest in the related
Letter of Credit based on its respective Commitment Percentage. If the Agent
shall honor a draft or other demand for payment presented or made under any
Letter of Credit, the Agent shall provide notice thereof to each Bank on the
date such draft or demand is honored unless the Company shall have satisfied its
reimbursement obligation under subsection (e) of this Section 3.3 by payment to
the Agent on such date. Each Bank, on such date, shall make an amount equal to
its Commitment Percentage of the amount paid by the Agent available in
immediately available funds at the principal office of the Agent for the account
of the Agent. If and to the extent such Bank shall not have made such amount
available to the Agent, such Bank and the Company severally agree to pay to the
Agent forthwith on demand such amount, together with interest thereon for each
day from the date such amount was paid by the Agent until such amount is so made
available to the Agent at (i) in the case of such Bank, the Federal Funds Rate
and (ii) in the case of the Company, the per annum rate equal to the interest
rate applicable during such period to the related Borrowing deemed (or that
could have been deemed) disbursed under subsection (e) of this Section 3.3 in
respect of the reimbursement obligation of the Company. If such Bank shall pay
such amount to the Agent together with such interest, if any, accrued, such
amount so paid shall constitute a Syndicated Loan by such Bank as part of the
Borrowing disbursed in respect of the reimbursement obligation of the Company
under subsection (e) of this Section 3.3 for purposes of this Agreement. The
failure of any Bank to make an amount equal to its Commitment Percentage of any
such amount paid by the Agent available to the Agent shall not relieve any other
Bank of its obligation to make available an amount equal to such other Bank's
Commitment Percentage of such amount, but no Bank shall be responsible for
failure of any other Bank to make its share available to the Agent.
(e)(i) Whether a Letter of Credit was issued for the account of the
Company or any Consolidated Subsidiary of the Company, and without limiting the
reimbursement obligation of such Consolidated Subsidiary, the Company agrees to
pay to the Agent, not later than 3:00 p.m. (Detroit time) on the date on which
the Agent shall honor a draft or other demand for payment presented or made
under such Letter of Credit, an amount equal to the amount paid by the Agent in
respect of such draft or other demand under such Letter of Credit and all
expenses paid or incurred by the Agent relative thereto (the "Reimbursement
Amount"). The Agent shall, on the date of each demand for payment under any
Letter of Credit, give the Company notice thereof and of the amount of the
Company's reimbursement obligation and liability for expenses relative thereto;
provided that the failure of the Agent to give such notice shall not affect the
reimbursement and other obligations of the Company under this Section 3.3.
Unless the Company shall have made such payment to the Agent on such day, upon
each such payment by the Agent, the Company shall be deemed to have elected to
satisfy its reimbursement obligation by a Floating Rate Borrowing in an amount
equal to the amount so paid by the Agent in respect of such draft or other
demand under such Letter of Credit, and the Agent shall be deemed to have
disbursed to the Company, for the account of the Banks, the Floating Rate Loans
comprising such Floating Rate Borrowing, and each Bank shall make its share of
each such Floating Rate Borrowing available to the Agent in accordance with
Section 3.5(b). Such Floating Rate Loans shall be deemed disbursed
notwithstanding any failure to satisfy any conditions for disbursement of any
Loan set forth in Article VIII and, to the extent of the Floating Rate Loans so
disbursed, the reimbursement obligation of the Company under this subsection
(e)(i) shall be deemed satisfied.
(ii) If, for any reason (including without limitation as a
result of the occurrence of an Event of Default with respect to the Company
pursuant to Section 9.1(f) or (g)), Floating Rate Loans may not be made by the
Banks as described in Section 3.3(e)(i), then (A) the Company agrees that each
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Reimbursement Amount not paid pursuant to the first sentence of Section
3.3(e)(i) shall bear interest, payable on demand by the Agent, at the interest
rate then applicable to Floating Rate Loans, and (B) effective on the date each
such Floating Rate Loan would otherwise have been made, each Bank severally
agrees that it shall unconditionally and irrevocably, without regard to the
occurrence of any Default, to the extent of such Bank's Commitment Percentage,
purchase a participating interest in each Reimbursement Amount. Each Bank will
immediately transfer to the Agent, in same day funds, the amount of its
participation. Each Bank shall share on a pro rata basis (calculated by
reference to its Commitment Percentage) in any interest which accrues thereon
and in all repayments thereof. If and to the extent that any Bank shall not
have so made the amount of such participating interest available to the Agent,
such Bank agrees to pay to the Agent forthwith on demand such amount together
with interest thereon, for each day from the date of demand by the Agent until
the date such amount is paid to the Agent, at the Federal Funds Rate.
(f) The reimbursement obligation of the Company under this
Section 3.3 with respect to each Letter of Credit shall be absolute,
unconditional and irrevocable and shall remain in full force and effect until
all such obligations of the Company to the Banks and the Agent with respect to
such Letter of Credit shall have been satisfied, and such obligations of the
Company shall not be affected, modified or impaired upon the happening of any
event, including without limitation, any of the following, whether or not with
notice to, or the consent of, the Company:
(i) Any lack of validity or enforceability of any Letter of
Credit or any documentation relating to any Letter of Credit or to any
transaction related in any way to such Letter of Credit (the "Letter of Credit
Documents");
(ii) Any amendment, modification, waiver, consent, or any
substitution, exchange or release of or failure to perfect any interest in
collateral or security, with respect to any of the Letter of Credit Documents;
(iii) The existence of any claim, setoff, defense or other
right which the Company may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any persons or entities for whom any such
beneficiary or any such transferee may be acting), the Agent or any Bank or any
other Person, whether in connection with any of the Letter of Credit Documents,
the transactions contemplated herein or therein or any unrelated transactions;
(iv) Any draft or other statement or document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(v) Payment by the Agent to the beneficiary under any Letter
of Credit against presentation of documents which do not comply with the terms
of the Letter of Credit, including failure of any documents to bear any
reference or adequate reference to such Letter of Credit;
(vi) Any failure, omission, delay or lack on the part of the
Agent or any Bank or any party to any of the Letter of Credit Documents to
enforce, assert or exercise any right, power or remedy conferred upon the Agent,
any Bank or any such party; or
(vii) Any other event or circumstance that would, in the
absence of this clause, result in the release or discharge by operation of law
or otherwise of the Company from the performance or observance of any
obligation, covenant or agreement contained in this Section 3.3.
No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which the Company has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to
MASCOTECH, INC. CREDIT AGREEMENT
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the Company against the Agent or any Bank. Nothing in this Section 3.3
shall limit the liability, if any, of the Agent to the Company pursuant to
Section 11.5(c).
3.4 Bid-Option Borrowings.
(a) The Bid-Option. In addition to Syndicated Borrowings that are
made pursuant to Section 3.1, the Company may, as set forth in this Section,
from time to time after the Closing Date to but excluding the Termination Date
request the Banks to offer to make Bid-Option Loans to the Company. Each Bank
may, but shall have no obligation to, make such offers; furthermore, each Bank
may limit the aggregate amount of Bid-Option Loans when quoting rates for more
than one Bid-Option Interest Period in any Bid-Option Quote, provided that such
limitation shall not be less than the minimum amounts required hereunder for
Bid-Option Loans and the Company may choose among the Bid-Option Loans if such
limitation is imposed. The Company may, but shall have no obligation to, accept
any such offers, in the manner set forth in this Section; provided that the
Dollar Equivalent of the aggregate outstanding principal amount of Bid-Option
Loans shall not at any time exceed the lesser of (i) the excess of (A) the
aggregate amount of the Commitments over (B) the sum of (x) the aggregate
outstanding principal amount of Syndicated Loans plus (y) the Letter of Credit
Obligations Amount, or (ii) fifty percent (50%) of the aggregate amount of the
Commitments (as the same may be reduced in accordance with the terms of this
Agreement during any applicable Bid-Option Interest Period); and provided,
further, that the Dollar Equivalent of the aggregate outstanding principal
amount of Foreign Currency Bid-Option Loans shall not exceed $50,000,000.
(b) Bid-Option Quote Requests. When the Company wishes to
request offers to make Bid-Option Loans under this Section, it shall transmit to
the Agent by telex or telecopy a request substantially in the form attached
hereto as Exhibit E (a "Bid-Option Quote Request") so as to be received no later
than 10:00 a.m. (Detroit time) on (i) the Business Day next preceding the date
of the Borrowing proposed therein, in the case of a Bid-Option Auction for
Absolute Rate Dollar Bid-Option Loans, (ii) the fifth Business Day next
preceding the date of the Borrowing in the case of a Bid-Option Auction for
Eurodollar Rate Dollar Bid-Option Loans, or (iii) the fourth Business Day prior
to the date of Borrowing proposed therein, in the case of a Bid-Option Auction
for Foreign Currency Bid-Option Loans, specifying:
(A) the proposed date of the Borrowing, which shall be a Business
Day;
(B) whether the Borrowing is to be an Absolute Rate Dollar
Bid-Option Borrowing, a Eurodollar Rate Dollar Bid-Option
Borrowing or a Foreign Currency Bid-Option Borrowing and, if a
Foreign Currency Bid-Option, the desired Foreign Currency;
(C) the aggregate amount of such Borrowing, which shall be (A)
$25,000,000 or a larger multiple of $5,000,000, in the case of
a Dollar Bid-Option Borrowing, or (B) not less than the Dollar
Equivalent of $5,000,000, in the case of a Foreign Currency
Bid-Option Borrowing; and
(D) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of the applicable
Interest Period.
The Company may request offers to make Bid-Option Loans for more than one
Interest Period in a single Bid-Option Quote Request. The Company may not
request offers to make Bid-Option Loans in more than
MASCOTECH, INC. CREDIT AGREEMENT
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one currency in any Bid-Option Quote Request and may not make more than
five Bid-Option Borrowings during any month.
(c) Invitation for Bid-Option Quotes. Promptly upon receipt of a
Bid-Option Quote Request, the Agent shall send to the Banks by telex or telecopy
(or telephone promptly confirmed by telex or telecopy) an Invitation for
Bid-Option Quotes substantially in the form attached hereto as Exhibit F, which
shall constitute an invitation by the Company to each Bank to submit Bid-Option
Quotes offering to make the Bid-Option Loans to which such Bid-Option Quote
Request relates in accordance with this Section.
(d) Submission and Contents of Bid-Option Quotes. (i) Each Bank
may submit a Bid-Option Quote containing an offer or offers to make Bid-Option
Loans in response to any Invitation for Bid-Option Quotes. Each Bid-Option
Quote must comply with the requirements of this subsection (d) and must be
submitted to the Agent by telex or telecopy (or by telephone promptly confirmed
by telex or telecopy) not later than (A) 9:00 a.m. (Detroit time) on the
proposed date of the Borrowing, in the case of a Bid-Option Auction for Absolute
Rate Dollar Bid-Option Loans, (B) 10:00 a.m. (Detroit time) on the fourth
Business Day prior to the proposed date of the Borrowing, in the case of a
Bid-Option Auction for Eurodollar Rate Dollar Bid-Option Loans, or (C) 2:00 p.m.
(Detroit time) on the third Business Day prior to the proposed date of the
Borrowing, in the case of a Bid-Option Auction for Foreign Currency Bid-Option
Loans; provided that Bid-Option Quotes submitted by the Agent (or any Affiliate
of the Agent) in its capacity as a Bank may be submitted, and may only be
submitted, if the Agent or such Affiliate notifies the Company of the terms of
the offer or offers contained therein not later than (A) 8:45 a.m. (Detroit
time) on the proposed date of the Borrowing, in the case of a Bid-Option Auction
for Absolute Rate Dollar Bid-Option Loans, (B) 9:45 a.m. (Detroit time) on the
fourth Business Day prior to the proposed date of the Borrowing, in the case of
a Bid-Option Auction for Eurodollar Rate Dollar Bid-Option Loans, or (C) 1:00
p.m. (Detroit time) on the third Business Day prior to the proposed date of the
Borrowing in the case of a Bid-Option Auction for Foreign Currency Bid-Option
Loans. Subject to Section 3.4(e), Article VIII and Article IX, any Bid-Option
Quote so made shall be irrevocable except with the written consent of the Agent
given on the instructions of the Company.
(ii) Each Bid-Option Quote shall be in substantially the
form attached hereto as Exhibit G and shall in any case specify:
(A) the proposed date of the Borrowing;
(B) whether the Bid-Option Loans for which the offers are made are
Absolute Rate Dollar Bid-Option Loans, Eurodollar Rate Dollar
Bid-Option Loans or Foreign Currency Bid-Option Loans, which
must match the type of Borrowing stated in the related
Invitation for Bid-Option Quotes;
(C) the principal amount of the Bid-Option Loan for which each
such offer is being made, the Dollar Equivalent of which (1)
may, together with the Dollar Equivalent of the aggregate
outstanding principal amount of all other Loans made by the
quoting Bank, exceed the amount of the Commitment of the
quoting Bank, (2) must be (y) in the case of any Dollar
Bid-Option Loan, $5,000,000 or a larger multiple thereof, or
(z) in the case of any Foreign Currency Bid-Option Loan, not
less than $1,000,000, and (3) may not exceed the Dollar
Equivalent of the aggregate principal
MASCOTECH, INC. CREDIT AGREEMENT
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amount of the Bid-Option Borrowing specified in the
related Invitation for Bid-Option Quotes;
(D) in the case of a Bid-Option Auction for Absolute Rate Dollar
Bid-Option Loans or Foreign Currency Bid-Option Loans, the
rate of interest per annum (rounded up to the nearest
1/10,000th of 1%) (the "Bid-Option Absolute Rate") offered for
each such Bid-Option Loan;
(E) in the case of a Bid-Option Auction for Eurodollar Rate Dollar
Bid-Option Loans, the applicable margin, which may be positive
or negative (the "Bid-Option Eurodollar Rate Margin"),
expressed as a percentage (rounded to the nearest 1/10,000th
of 1%), offered for each such Bid-Option Loan;
(F) the Interest Period(s) for which each such Bid-Option Absolute
Rate or Bid-Option Eurodollar Rate Margin, as the case may be,
is offered; and
(G) the identity of the quoting Bank.
(iii) Any Bid-Option Quote shall be disregarded if it:
(A) is not substantially in the form of Exhibit G hereto or does
not specify all of the information required by subsection
(d)(ii) above;
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set forth in
the applicable Invitation for Bid-Option Quotes; or
(D) arrives after the time set forth in subsection (d)(i);
provided that a Bid-Option Quote shall not be disregarded pursuant to clause
(B) or (C) above solely because it indicates that an allocation that might
otherwise be made to it pursuant to Section 3.4(g) would be unacceptable.
(e) Notice to Company. The Agent shall promptly notify the
Company of the terms (i) of any Bid-Option Quote submitted by a Bank that is in
accordance with subsection (d) of this Section and (ii) of any Bid-Option Quote
that amends, modifies or is otherwise inconsistent with a previous Bid-Option
Quote submitted by such Bank with respect to the same Bid-Option Quote Request.
Any such subsequent Bid-Option Quote shall be disregarded by the Agent unless
such subsequent Bid-Option Quote is submitted solely to correct a manifest error
in such former Bid-Option Quote. The Agent'sEnotice to the Company shall
specify (i) the Dollar Equivalent of the aggregate principal amount of
Bid-Option Loans for which offers have been received for each Interest Period
specified in the related Bid-Option Quote Request and (ii) the respective Dollar
Equivalent of the principal amounts and respective Bid-Option Absolute Rates or
Bid-Option Eurodollar Rate Margins, as the case may be, so offered.
MASCOTECH, INC. CREDIT AGREEMENT
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(f) Acceptance and Notice by Company. Not later than 10:00 a.m.
(Detroit time) on (i) the proposed date of the Borrowing, in the case of a
Bid-Option Auction for Absolute Rate Dollar Bid-Option Loans, (ii) the third
Business Day prior to the proposed date of the Borrowing, in the case of a
Bid-Option Auction for Eurodollar Rate Dollar Bid-Option Loans, or (iii) the
second Business Day prior to the proposed date of the Borrowing, in the case of
a Bid-Option Auction for Foreign Currency Bid-Option Loans, the Company shall
notify the Agent of its acceptance or non-acceptance of the offers so notified
to it pursuant to subsection (e) of this Section 3.3. In the case of
acceptance, such notice (a "Notice of Bid-Option Borrowing") shall specify the
aggregate principal amount of accepted offers for the applicable Interest
Period(s). The Company may accept any Bid-Option Quote in whole or in part;
provided that:
(A) the Dollar Equivalent of the aggregate principal amount of
each Bid-Option Borrowing may not exceed the applicable amount
set forth in the related Bid-Option Quote Request;
(B) the Dollar Equivalent of the aggregate principal amount of
each Bid-Option Borrowing must be (1) in the case of Dollar
Bid-Option Borrowings, $25,000,000 or a larger multiple of
$5,000,000, unless the aggregate amount of the related
Bid-Option Loans for which Bid-Option Quotes were
received is less than $25,000,000, in which case the aggregate
principal amount of the Dollar Bid-Option Borrowing may be any
amount less than $25,000,000, and (2) in the case of Foreign
Currency Bid-Option Loans, not less than $5,000,000 (or, if
less, the aggregate amount of the related Bid-Option Loans for
which Bid-Option Quotes were received);
(C) acceptance of offers may only be made on the basis of
ascending Bid-Option Absolute Rates or Bid-Option Eurodollar
Rate Margins, as the case may be; and
(D) the Company may not accept any offer that is described in
clause (iii) of subsection (d) of this Section or that
otherwise fails to comply with the requirements of this
Agreement.
(g) Allocation by Agent. If offers are made by two or more Banks
with the same Bid-Option Absolute Rates or Bid-Option Eurodollar Rate Margins,
as the case may be, for a greater aggregate principal amount than the amount in
respect of which offers are accepted for the related Interest Period, the
principal amount of Bid-Option Loans in respect of which such offers are
accepted shall be allocated by the Agent among such Banks as nearly as possible
(in such multiples, not greater than the Dollar Equivalent of $500,000, as the
Agent may deem appropriate) in proportion to the aggregate principal amount of
such offers (excluding any Bank that has indicated in its offer that an
allocation which otherwise would be made to it is unacceptable). Determinations
by the Agent of the amounts of Bid-Option Loans shall be conclusive in the
absence of manifest error.
3.5 Notice to Banks; Funding of Loans. (a) Upon receipt of a Notice
of Borrowing or Request for Letter of Credit Issuance, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's share, if any, of
such Borrowing or the related Letter of Credit risk, as the case may be. A
Notice of Borrowing or Request for Letter of Credit Issuance shall be
irrevocable by the Company once the Agent begins notifying any Bank of the
contents thereof.
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 32
(b) Each Bank, not later than 1:00 p.m. (Detroit time) on the
date any Borrowing is requested to be made, other than a Foreign Currency
Bid-Option Borrowing, shall (except as provided in subsection (d) of this
Section 3.5) make its share, if any, of such Borrowing available to the Agent in
immediately available funds, at the Agent'sEaddress specified in or pursuant to
Section 11.2, for disbursement to the Company. Unless the Agent determines that
any applicable condition specified in Article VIII has not been satisfied, the
Agent will make funds actually so received from the Banks available to the
Company at the Agent's aforesaid address. Unless the Agent shall have received
notice from any Bank prior to the date such Borrowing is requested to be made
that such Bank will not make available to the Agent such Bank's share of such
Borrowing, the Agent may assume that such Bank has made such share available to
the Agent on the date such Borrowing is requested to be made in accordance with
this Section 3.5. If and to the extent such Bank shall not have so made such
share available to the Agent, the Agent may (but shall not be
obligated to) make such amount available to the Company, and such Bank and the
Company severally agree to pay to the Agent forthwith on demand such amount,
together with interest thereon for each day from the date such amount is made
available to the Company by the Agent until the date such amount is repaid to
the Agent at (i) in the case of such Bank, the Federal Funds Rate and (ii) in
the case of the Company, a rate per annum equal to the interest rate applicable
to such Borrowing during such period. If such Bank shall pay such amount to
the Agent together with interest, such amount so paid shall constitute a Loan
by such Bank as a part of the related Borrowing for purposes of this Agreement.
The failure of any Bank to make its share of any Borrowing available to the
Agent shall not relieve any other Bank of its obligation to make available to
the Agent its share, if any, of such Borrowing on the date such Borrowing is
requested to be made, but no Bank shall be responsible for failure of any other
Bank to make such share available to the Agent on the date of such Borrowing.
(c) Each Bank, not later than 11:00 a.m. (Detroit time) on the
date any Foreign Currency Bid-Option Borrowing is requested to be made shall
(except as provided in subsection (d) of this Section 3.5) make its share, if
any, of such Borrowing available to the Company by depositing the proceeds
thereof in an account maintained and designated by the Company at an office or
branch of such Bank (or of an Affiliate of such Bank) located in the principal
financial center of the country issuing the Foreign Currency in which such
Borrowing is denominated or, if neither such Bank nor any Affiliate of such Bank
has an office or branch in such financial center, at such Bank's Eurodollar
Lending Office or Domestic Lending Office as selected by such Bank, or by such
other means requested by the Company and acceptable to such Bank. Promptly upon
any such disbursement of a Foreign Currency Bid-Option Loan, the Bank making
such Loan shall give written notice to the Agent by telex or telecopy of the
making of such Loan, which notice shall be substantially in the form attached
hereto as Exhibit H.
(d) If any Bank is to make a new Syndicated Loan or Dollar
Bid-Option Loan hereunder on a day on which the Company is to repay all or any
part of an outstanding Syndicated Loan or Dollar Bid-Option Loan from such Bank,
or if any Bank is to make a new Foreign Currency Bid-Option Loan hereunder on a
day on which the Company is to repay all or any part of an outstanding Foreign
Currency Bid-Option Loan of the same Foreign Currency from such Bank, such Bank
shall apply the proceeds of its new Loan to make such repayment and only an
amount equal to the difference, if any, between the amount of such new Loan and
the amount being repaid shall (i) be made available by such Bank to the Agent or
the Company, as provided in subsection (b) or (c) of this Section 3.5 or (ii) be
remitted by the Company to the Agent or such Bank as provided in Section 4.4, as
the case may be. Except as provided in the first sentence of this Section
3.5(d), no Bank shall apply the proceeds of any Loan, whether a Foreign Currency
Bid-Option Loan or other type of Loan, to repay all or any part of an
outstanding Foreign Currency Bid-Option Loan, the entire amount of which shall,
unless repaid by the application of the proceeds of a new Foreign Currency
Bid-Option Loan of the same Foreign Currency as permitted in the first sentence
of this Section 3.5(d), be remitted in full by the Company to the Banks when due
as provided in Section 4.4.
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3.6 The Notes.
(a) The Syndicated Loans of each Bank shall be evidenced by a
single Syndicated Note payable to the order of such Bank in an amount equal to
the aggregate unpaid principal amount of such Bank's Syndicated Loans.
(b) The Bid-Option Loans of each Bank shall be evidenced by a
single Bid-Option Note payable to the order of such Bank in an amount equal to
the Dollar Equivalent of the aggregate unpaid principal amount of such Bank's
Bid-Option Loans.
(c) Upon receipt of each Bank's Notes pursuant to Section 8.2,
the Agent shall forward such Notes to such Bank. Each Bank shall record on its
books and records, and prior to any transfer of its Notes shall endorse on the
schedules forming a part thereof appropriate notations to evidence, the date of
disbursement, amount and maturity of each Loan made by it, the interest rate and
Interest Period applicable thereto and the date and amount of each payment of
principal made by the Company with respect thereto. Any notations made by such
Bank shall be prima facie evidence of the matters so recorded or endorsed. Each
Bank is hereby irrevocably authorized by the Company to make such records, so to
endorse schedules to its Notes and to attach to and make a part of any Note a
continuation of any such schedule as and when required. Failure by any Bank to
make such records or so to endorse the schedules to its Notes, or any error in
recording or so endorsing any such information, shall not affect the Company's
liability hereunder or under any Note.
3.7 Certain Fees.
(a) Commitment Fees. [Intentionally Omitted]
(b) Facility Fee. The Company will pay to the Agent for the
respective accounts of the Banks a facility fee, for each calendar quarter or
portion thereof from the Closing Date to but not including the Termination Date,
on the amount of each Bank's Commitment, whether used or unused, during such
period, at a rate equal to the Applicable Margin for Facility Fees. All accrued
facility fees hereunder shall be payable in arrears with respect to each
calendar quarter or portion thereof not later than the tenth day after the end
of each March, June, September and December, commencing with the first such
calendar quarter-end after the Closing Date, and on the Termination Date.
Promptly upon receipt of such facility fees for any calendar quarter for portion
thereof, the Agent shall distribute such facility fees to the Banks ratably in
accordance with their respective Commitment Percentages.
(c) Closing Fee. The Company will further pay to the Agent for
the respective accounts of the Banks such amount as may be agreed upon between
the Company and the Banks. The closing fees shall be payable on or before the
Closing Date. Promptly upon its receipt thereof, the Agent shall distribute
such fees to the Banks.
(d) Agent's Fees. The Company will further pay to the Agent fees for its
own account for its services as Agent under this Agreement in such amounts and
at such times as may from time to time be agreed upon between the Company and
the Agent.
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3.8 Termination or Reduction of Commitments.
(a) Optional Termination or Reduction. Subject to Section 5.5,
the Company shall have the right at any time and from time to time, upon five
Business Days' prior written notice to the Agent, to terminate or
proportionately reduce the amount of the Commitments, provided, that (i) any
partial reduction of the amount of the Commitments shall be in the amount of
$10,000,000 or a larger multiple thereof, (ii) no such reduction shall be
permitted with respect to any portion of the Commitments not in excess of the
sum of the Dollar Equivalent of the aggregate outstanding principal amount of
all Loans, plus the Letter of Credit Obligations Amount, plus the Dollar
Equivalent of the aggregate amount of all Borrowings for which a Notice of
Borrowing is then pending, plus the aggregate amount of all Letters of Credit
for which a Request for Letter of Credit Issuance is then pending, (iii) the
Commitments may not be terminated if any Loans or Letters of Credit are then
outstanding or any Notice of Borrowing or Request for Letter of Credit Issuance
is then pending and (iv) no such termination or reduction shall be permitted if,
after giving effect thereto, the Dollar Equivalent of the aggregate principal
amount of the outstanding Bid-Option Loans would exceed fifty percent (50%) of
the aggregate amount of the Commitments. The Commitments or any portion thereof
terminated or reduced pursuant to this Section may not be reinstated. The
accrued facility fees with respect to the terminated Commitments or the amount
of any reduction therein shall be payable on the effective date of such notice.
Upon receipt of any notice from the Company pursuant to this Section, the Agent
shall promptly notify each Bank of the contents thereof and of such Bank's share
of any reduction of the Commitments. Each such notice shall be irrevocable by
the Company once the Agent begins notifying any Bank of the contents thereof.
(b) [intentionally omitted].
(c) Section 4.2(d) Compliance. On the effective date of any
reduction or termination of the Commitments under this Section 3.8, the Company
shall make such payments as may be required under Section 4.2(d) as a result
thereof.
3.9 Mandatory Termination of Commitments. The Commitments shall
terminate on the Termination Date.
3.10 Extension of Scheduled Expiration Date. (a) The Company may
request that the Banks extend the Scheduled Expiration Date from February 28,
2002 to February 28, 2003. No such request shall be effective unless it is made
in writing by the Company at any time after February 28, 1999.
(b)(i) Upon receipt of any such written request, the Agent shall
promptly distribute a copy thereof to each Bank.
(ii) Each Bank shall have the time specified in such request to agree
or refuse to extend the Scheduled Expiration Date, which agreement or refusal,
as the case may be, must be communicated to the Agent in writing; provided, that
(A) the failure of any Bank so to communicate its agreement so to extend the
Scheduled Expiration Date shall be deemed to be such Bank's refusal so to
extend, (B) any written communication of any Bank of its agreement so to extend
shall be irrevocable and (C) any agreement of any Bank so to extend communicated
to the Agent subject to any qualifications or conditions shall be deemed to be a
refusal so to extend the Scheduled Expiration Date.
(iii) The Agent shall promptly notify the Company which Banks have
consented to such written request (a "Consenting Bank"). Any failure by the
Agent to so notify the Company shall not be deemed a consent to the Company's
request.
(iv) Each Bank that elects not to extend the requested Scheduled
Expiration Date or
MASCOTECH, INC. CREDIT AGREEMENT
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fails to so notify the Agent of such consent (a "Non-Consenting Bank")
hereby agrees that if any other Bank or financial institution acceptable to the
Company and the Agent offers to purchase such Non-Consenting Bank's
Commitment(s) for a purchase price equal to the sum of all amounts then owing
with respect to the Loans and all other amounts accrued for the account of such
Non-Consenting Bank and any amounts which may become owing as a result of such
purchase, such Non-Consenting Bank will, promptly or upon the existing
Scheduled Expiration Date for such Non-Consenting Bank, as elected by the
Company, assign, sell and transfer all of its right, title and obligations with
respect to the foregoing to such other Bank or financial institution pursuant
to and on the terms specified in the form of Assignment and Acceptance and
Section 11.6.
(v) Notwithstanding anything herein to the contrary, the
Scheduled Expiration Date will not be extended if the aggregate Commitments of
each Consenting Bank plus the additional Commitments of each Bank or other
financial institution replacing any Non-Consenting Bank pursuant to clause (iv)
above and agreeing to the request does not equal or exceed 75% of the then
existing aggregate Commitments. If the Scheduled Expiration Date is extended
hereunder, it will not be extended for the Non-Consenting Banks whose
Commitments are not purchased pursuant to clause (iv) above, and each such
Non-Consenting Bank's Commitment shall remain in effect and not be terminated
until the Scheduled Expiration Date that is then in effect.
ARTICLE IV.
PRINCIPAL PAYMENTS; INTEREST; ETC
4.1 Scheduled Principal Payments. Unless earlier payment is required
under this Agreement, or made pursuant to Section 4.2, the Company shall pay the
entire principal amount of each Loan on the last day of the Interest Period
applicable to such Loan.
4.2 Prepayments of Principal. The following provisions apply in
respect of prepayment of the Loans by the Company:
(a) The Company may prepay Floating Rate Loans in whole or in part on
any Business Day in amounts aggregating $5,000,000 or any larger multiple of
$5,000,000 (unless such prepayment would cause the aggregate outstanding
principal amount of Floating Rate Loans to be less than $5,000,000, in which
event prepayment may only be made in an amount equal to the entire outstanding
principal amount of Floating Rate Loans), by paying the principal amount being
prepaid together with accrued interest thereon to the date of prepayment. Each
prepayment in part of such Loans shall be applied to such Loans of the Banks
ratably in accordance with their respective shares of the aggregate outstanding
principal amount of the Floating Rate Loans.
(b) The Company may, upon at least three Business Days' notice to the
Agent, prepay any Fixed Base Rate Syndicated Borrowing in whole or in part on
any Business Day in the amount of $10,000,000 or any larger multiple of
$5,000,000 (unless such prepayment would cause the aggregate outstanding
principal amount of such Fixed Base Rate Syndicated Borrowing to be less than
$10,000,000, in which event prepayment may only be made in an amount equal to
the outstanding unpaid principal amount of such Fixed Base Rate Syndicated
Borrowing), by paying the principal amount being prepaid together with accrued
interest thereon to the date of prepayment; provided, however, that the Company
shall compensate the Banks pursuant to Section 5.5 for any losses or expenses
incurred as a result thereof. Each prepayment in part of any Fixed Base Rate
Syndicated Borrowing shall be applied to the Fixed Base Rate Syndicated Loans
comprising such Borrowing of the Banks ratably in accordance with their
respective shares of the aggregate outstanding principal amount of such Loans.
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(c) Unless otherwise required by this Agreement, the Company may not
prepay any Bid-Option Loan in whole or in part without the consent of the Bank
that made such Bid-Option Loan.
(d) Notwithstanding SectionE4.2(a), (b) and (c), if on any date:
(i) the sum of (A) the Dollar Equivalent of the aggregate
outstanding principal amount of Loans plus (B) the Letter of
Credit Obligations Amount exceeds the aggregate amount of the
Commitments; or
(ii) the Dollar Equivalent of the aggregate outstanding principal
amount of Bid-Option Loans exceeds fifty percent (50%) of the
Commitments; or
(iii) the Dollar Equivalent of the aggregate outstanding
principal amount of Foreign Currency Bid-Option Loans exceeds
$50,000,000;
then the Company shall pay forthwith the principal amount of such excess,
together with accrued interest thereon to the date of payment; provided,
however, that the Company shall compensate the Banks pursuant to Section 5.5
for any losses or expenses incurred as a result thereof; and provided further,
however, that (A) no such payment otherwise required under clause (i) of this
Section 4.2(d) solely because of currency exchange rate fluctuations affecting
the Dollar Equivalent of the aggregate outstanding principal amount of Foreign
Currency Bid-Option Loans shall be required unless such payment is due on a
date when a payment of principal of any Loan is otherwise due hereunder, and
(B) notwithstanding clause (A) of this proviso, no such payment otherwise
required under subsection (ii) or (iii) of this Section 4.2(d) shall be
required if due solely because of currency exchange rate fluctuations affecting
the Dollar Equivalent of the aggregate outstanding principal amount of Foreign
Currency Bid-Option Loans since the last date on which any of such Foreign
Currency Bid-Option Loans were made.
(e) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's share (in accordance with Section 4.4) of such prepayment. Each such
notice shall be irrevocable by the Company once the Agent begins notifying any
Bank of the contents thereof.
4.3 Interest Payments. The Company shall pay interest to the Banks on
the unpaid principal amount of each Loan, for the period commencing on the date
such Loan is made until such Loan is paid in full, on each Interest Payment Date
and at maturity (whether at stated maturity, by acceleration or otherwise), and
thereafter on demand, at the following rates per annum (subject, however, to the
provisions of Section 11.12):
(a) With respect to each Floating Rate Loan, at the Floating Rate.
(b) With respect to each CD Rate Loan, at the CD Rate, provided that if
any CD Rate Loan or any portion thereof shall, as a result of clause (b) of the
definition of CD Rate Interest Period, have an Interest Period of less than
thirty (30) days, such CD Rate Loan or portion thereof shall bear interest
during such Interest Period at the Floating Rate.
(c) With respect to each Eurodollar Rate Syndicated Loan, the
Syndicated Eurodollar Rate, provided that if any Eurodollar Rate Syndicated Loan
or any portion thereof shall, as a result of clause (c) of the definition of
Eurodollar Rate Interest Period, have an Interest Period of less than one month,
such Loan or portion thereof shall bear interest during such Interest Period at
the Floating Rate.
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(d) With respect to each Eurodollar Rate Dollar Bid-Option Loan, the
Bid-Option Eurodollar Rate, provided that if any Eurodollar Rate Bid-Option Loan
or any portion thereof shall, as a result of clause (c) of the definition of
Eurodollar Rate Interest Period, have an Interest Period of less than one month,
such Loan or portion thereof shall bear interest during such Interest Period at
the Floating Rate.
(e) With respect to each Absolute Rate Dollar Bid-Option Loan and
Foreign Currency Bid-Option Loan, the Bid-Option Absolute Rate quoted for such
Loan by the Bank making such Loan.
Notwithstanding the foregoing subsections (a) through (e), the Company shall
(subject to the provisions of Section 11.12) pay interest on demand at the
Overdue Rate on the outstanding principal amount of any Loan and any other
amount payable by the Company hereunder (other than interest) which is not paid
in full when due (whether at stated maturity, by acceleration or otherwise) for
the period commencing on the due date thereof until the same is paid in full.
4.4 Payment Procedures.
(a) All payments of any facility fees, closing fees, Letter of
Credit fees, Agent'sEfees, or other fees hereunder and of principal of, and
interest on, the Loans, other than Foreign Currency Bid-Option Loans, and of
reimbursement obligations in respect of Letters of Credit shall be made in
Dollars and in funds immediately available at the Agent'sEprincipal office in
Detroit, Michigan not later than 1:00 p.m. (Detroit time) on the date on which
such payment shall become due. All payments of principal of, and interest on,
the Foreign Currency Bid-Option Loans shall be made in the currencies in which
such Loans are denominated and in funds immediately available, freely
transferable and cleared at the office or branch from which the Loan was made
under Section 3.5(c) not later than 3:00 p.m. local time on the date on which
such payment shall become due. Promptly upon receipt of any payment of
principal of the Foreign Currency Bid-Option Loans the Bank receiving such
payment shall give written notice to the Agent by telex or telecopy of the
receipt of such payment, which notice shall be substantially in the form
attached hereto as ExhibitEI. Whenever any payment of principal of, or interest
on, the Loans or of any fee shall be due on a day which is not a Business Day,
the date for payment thereof shall be extended to the next succeeding Business
Day (unless as a result thereof, in respect of Eurodollar Rate Loans, such date
would fall in the next calendar month, in which case it shall be advanced to the
next preceding Business Day) and, in the case of a payment of principal,
interest thereon shall be payable for any such extended time.
(b) Payments of principal of or interest on Existing Loans shall
be promptly distributed by the Existing Agent to each Existing Bank ratably in
proportion to each Existing Bank's Existing Commitment. Payments of principal
of Syndicated Loans that comprise a Syndicated Borrowing, including any
Substitute Loan made by a Bank as part of any Fixed Base Rate Syndicated
Borrowing, shall be promptly distributed by the Agent to the Banks that made
such Syndicated Loans ratably in proportion to their respective shares of the
outstanding principal amount of such Syndicated Borrowing. Payments of interest
on Syndicated Loans that comprise a Syndicated Borrowing, including any
Substitute Loan made by a Bank as part of any Fixed Base Rate Syndicated
Borrowing, shall be promptly distributed by the Agent to the Banks that made
such Syndicated Loans so that each such Bank receives a portion of such payment
equal to the amount of interest then owing to such Bank on such Loans multiplied
by a fraction, the denominator of which is the total amount of interest then
owing to all such Banks on such Loans and the numerator of which is the amount
of such payment. Payments of principal of or interest on any Dollar Bid-Option
Loans that comprise a Dollar Bid-Option Borrowing shall be promptly distributed
by the Agent to the Banks that made such Dollar Bid-Option Loans ratably in
accordance with their respective Dollar Bid-Option Percentages.
(c) During any period when Dollar Bid-Option Loans are
outstanding, if the Agent cannot reasonably determine whether a particular
payment received by the Agent from the Company was
MASCOTECH, INC. CREDIT AGREEMENT
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intended to be applied to the principal of or interest on one or more
Dollar Bid-Option Borrowings or to the principal of or interest on Syndicated
Borrowings, or if the amount of any payment by the Company is insufficient to
pay all amounts then due and payable with respect to Dollar Bid-Option Loans
and Syndicated Loans (including Substitute Loans), the Agent shall first
apportion such payment between the Dollar Bid-Option Loans and the Syndicated
Loans (including Substitute Loans) (i) if such payment is of principal, ratably
in accordance with the aggregate principal amount of each such type of Loans on
which payment is then due, and (ii) if such payment is of interest, ratably in
accordance with the aggregate amount of interest that is then due on each
such type of Loans. After such apportionment, (i) the Agent shall distribute
the portion of the payment received and allocated to the Syndicated Loans
(including Substitute Loans) to the Banks as provided for payments of principal
of or interest on, as the case may be, Syndicated Loans under Section 4.4(b),
and (ii) the portion of the payment received and allocated to the Dollar
Bid-Option Loans on which a payment is then due shall first be allocated among
the different Dollar Bid-Option Borrowings of which such Dollar Bid-Option
Loans are a part (A) if such payment is of principal, ratably in accordance
with the aggregate principal amount of each such Dollar Bid-Option Borrowing,
and (B) if such payment is of interest, ratably in accordance with the
aggregate amount of interest that is then due on each such Dollar Bid-Option
Borrowing. After such allocation, the Agent shall distribute the amount
allocated to each Dollar Bid-Option Borrowing to the Banks that made the Dollar
Bid-Option Loans comprising such Dollar Bid-Option Borrowing ratably in
accordance with their respective Dollar Bid-Option Percentages.
(d) Any prepayments of Bid-Option Loans made under Section 4.2(d)
may be applied to any one or more Bid-Option Borrowings as the Company may
select; provided that such payments shall be applied by the Agent, in the case
of Dollar Bid-Option Loans, or made directly by the Company, in the case of
Foreign Currency Bid-Option Loans, to the Banks participating in any such
Bid-Option Borrowing ratably in accordance with their respective Dollar
Bid-Option Percentages or Foreign Currency Bid-Option Percentages, as the case
may be.
4.5 Computation of Interest and Fees. Facility fees, Agent fees and
Letter of Credit fees, and interest on the Floating Rate Loans and other amounts
due hereunder, other than Fixed Rate Loans, shall be computed on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed. Interest
on the Fixed Rate Loans shall be computed on the basis of a year of 360 days and
actual days elapsed.
4.6 No Setoff or Deduction. All payments of principal of and interest
on the Loans and other amounts payable by the Company hereunder shall be made by
the Company without setoff or counterclaim, and free and clear of, and without
deduction or withholding for, or on account of, any present or future taxes,
levies, imposts, duties, fees, assessments, or other charges of whatever nature,
imposed by any governmental authority, or by any department, agency or other
political subdivision or taxing authority.
4.7 Other Provisions Applicable to Foreign Currency Bid-Option Loans.
Foreign Currency Bid-Option Loans will be made by any Bank, if at all, in the
context of an international transaction, and the specification of payment in the
related Foreign Currency at a specific place pursuant to this Agreement is of
the essence. Such Foreign Currency shall be the currency of account and payment
of such Loans under this Agreement and the Bid-Option Notes. Notwithstanding
anything in this Agreement, the obligation of the Company in respect of such
Loans shall not be discharged by an amount paid in any other currency or at
another place, whether pursuant to a judgment or otherwise, to the extent the
amount so paid, on prompt conversion into the applicable Foreign Currency and
transfer to such Bank under normal banking procedure, does not yield the amount
of such Foreign Currency due under this Agreement and the Bid-Option Notes. In
the event that any payment, whether pursuant to a judgment or otherwise, upon
conversion and transfer, does not result in payment of the amount of such
Foreign Currency due under this Agreement and the Bid-Option Notes, such Bank
shall have an independent cause of action against the Company for the currency
deficit.
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ARTICLE V.
CHANGE IN CIRCUMSTANCES
5.1 Impossibility; Interest Rate Inadequate or Unfair. (a) If before
the beginning of any Eurodollar Rate Interest Period or any CD Rate Interest
Period:
(i) the Agent is advised by either Reference Bank that deposits
in Dollars (in the applicable amounts) are not being offered to
such Reference Bank in the relevant market for such Eurodollar
Rate Interest Period or CD Rate Interest Period, as the case may
be, or
(ii) the Required Banks advise the Agent that the
Eurodollar Base Rate or the CD Base Rate will not adequately and
fairly reflect the cost to such Banks of maintaining, making or
funding, for such Eurodollar Rate Interest Period or CD Rate
Interest Period, Eurodollar Rate Loans or CD Rate Loans, as the
case may be, to which such Eurodollar Rate Interest Period or CD
Rate Interest Period applies,
the Agent shall forthwith give notice thereof to the Company and the Banks,
whereupon until the Agent notifies the Company that the circumstances giving
rise to such suspension no longer exist, the obligations, if any, of the Banks
to make Eurodollar Rate Loans or CD Rate Loans, as the case may be, shall be
suspended. In the case of Eurodollar Rate Loans, unless the Company notifies
the Agent (i) not later than 11:00 a.m. (Detroit time) on the second Business
Day before the beginning of such Eurodollar Rate Interest Period that the
Company elects that the Borrowing shall be a CD Rate Borrowing or (ii) not
later than 3:00 p.m. (Detroit time) on the Business Day before the beginning of
such Eurodollar Rate Interest Period that the Company elects not to borrow on
such date, such Borrowing shall, subject to the provisions of Section 8.1, be a
Floating Rate Borrowing. In the case of CD Rate Loans, unless the Company
notifies the Agent not later than 3:00 p.m. (Detroit time) on the first
Business Day before the beginning of such CD Rate Interest Period that the
Company elects not to borrow on such date, such Borrowing shall, subject to the
provisions of Section 8.1, be a Floating Rate Borrowing. Promptly after the
Agent receives any such notice from the Company under this Section 5.1(a), the
Agent shall notify each Bank of the contents thereof. Any such notice from the
Company shall be irrevocable once the Agent begins notifying any Bank of the
contents thereof.
(b) If deposits in Dollars (in the applicable amounts) are not
being offered to a Reference Bank in the relevant market for any Eurodollar Rate
Interest Period or CD Rate Interest Period, by reason of circumstances affecting
such Reference Bank and not affecting the London or Nassau interbank market or
the United States market for certificates of deposit, as the case may be,
generally, the Agent shall, in consultation with the Company and with the
consent of the Required Banks, appoint another Bank to act as a Reference Bank
hereunder.
5.2 Illegality. If, after the date of this Agreement, the introduction
of, or any change in, any applicable law, rule or regulation or in the
interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof or compliance by any
Bank (or its Applicable Lending Office) with any request or directive (whether
or not having the force of law) of any such authority shall make it unlawful or
impossible for such Bank (or its Applicable Lending Office) to honor its
binding legal obligations, if any, hereunder to make, maintain or fund any type
of Fixed Rate Loans, such Bank shall so notify the Agent, and the Agent shall
forthwith give notice thereof to the Company, whereupon until such Bank
notifies the Agent that the circumstances giving rise to such suspension no
longer exist, the
MASCOTECH, INC. CREDIT AGREEMENT
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obligation, if any, of such Bank to make such type of Fixed Rate Loans
shall be suspended. Before any Bank gives any notice of unlawfulness or
impossibility to the Agent under this Section 5.2, such Bank shall designate a
different Applicable Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. Upon receipt of such notice, the Company shall
prepay in full the then outstanding principal amount of each affected Fixed
Rate Loan of such Bank together with accrued interest thereon (a) on the last
day of the then current Interest Period applicable to such Loan if such Bank
may lawfully continue to maintain and fund such Loan to such day, or (b)
immediately if such Bank may not lawfully continue to fund and maintain such
Loan to such day. Concurrently with prepaying each such Fixed Rate Loan, the
Company shall borrow a Floating Rate Loan (or, if the Company so elects by at
least three Business Days' notice to the Agent and such Bank, a Fixed Base Rate
Syndicated Loan of an unaffected type) in an equal principal amount from such
Bank, for an Interest Period coinciding with the remaining term of the Interest
Period applicable to such Fixed Rate Loan, and such Bank shall make such a
Loan, provided that there has been no acceleration of the amounts due under the
Notes pursuant to Article IX.
5.3 Increased Cost; Yield Protection.
(a) If, after the date hereof, the introduction of, or any change
in, any applicable law, treaty, rule or regulation (whether domestic or foreign
and including, without limitation, the Federal Deposit Insurance Act, as
amended, and Regulation D of the Board of Governors of the Federal Reserve
System) or in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive of any such authority, central bank or
comparable agency (whether or not having the force of law),
(i) shall subject any Bank (or its Applicable Lending Office) to any
tax, duty or other charge with respect to its obligation to make any
Loans, its Notes, any of its Loans or any of the Letters of Credit or
shall change the basis of taxation of payments to any Bank (or its
Applicable Lending Office) of the principal of or interest on any of
its Fixed Rate Loans or in respect of its obligation, if any, to make
any Loans or to participate in the risk of Letters of Credit (except
for changes in the rate of tax on the overall net income of such Bank
or its Applicable Lending Office imposed by the jurisdiction in which
such Bank's principal executive office or Applicable Lending Office is
located), or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System, but excluding (A) with respect to any
CD Rate Loan any reserve requirements to the extent included in
clause (ii) of subpart (a) of the definition of CD Base Rate when
calculating the CD Base Rate with respect to such CD Rate Loan,
and (B) with respect to any Eurodollar Rate Loan any reserve
requirements to the extent included in clause (b) of the definition
of Eurodollar Base Rate when calculating the Eurodollar Base
Rate with respect to such Eurodollar Rate Loan), special deposit
or similar requirement (including, without limitation, any deposit
insurance assessment in respect of deposits held outside the United
States, but excluding with respect to any CD Rate Loan any assessment
to the extent included in clause (b) of the definition of CD Base Rate
when calculating the CD Base Rate with respect to such CD Rate Loan),
against assets of, deposits with or for the account of, or credit
extended by, any Bank's Applicable Lending Office, or shall impose on
any Bank (or its Applicable Lending Office or the relevant interbank
market or the United States certificate of deposit market) any other
condition affecting its obligation, if any, to
MASCOTECH, INC. CREDIT AGREEMENT
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make Loans or to participate in the risk of Letters of Credit or
affecting its Loans or the Letters of Credit or affecting the
Company's obligations under the Notes in respect of such Loans,
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or maintaining its existing or future
Fixed Rate Loans or of participating in the risk of Letters of Credit, or to
reduce the amount of any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or under the Notes (in respect
of Fixed Rate Loans or Letters of Credit) by an amount deemed by such Bank to
be material, then such Bank may notify the Company (with a copy of any such
notice to be provided to the Agent) of any such fact of which it has knowledge
and demand compensation therefor; provided that, if such Bank fails to demand
such compensation (or notify the Company that it will or may demand such
compensation) promptly upon becoming aware of the facts entitling it to do so
or, if such Bank is contesting the cause of such increased cost or reduced sum
received or receivable, promptly after the earlier of (A) the final
determination of such contest or (B) an officer of such Bank who is responsible
for the administration of the credit outstanding under this Agreement from such
Bank to the Company becoming aware of such facts, such Bank shall not be
entitled to such compensation for the period before the date on which it
actually demands (or notifies the Company that it will or may demand) such
compensation; provided, further, that if such Bank is contesting the cause of
such increased cost or reduced sum received or receivable, such Bank shall not
in any event be entitled to such compensation for any period prior to six
months before it notifies the Company that such Bank may or will demand such
compensation. The Company agrees to pay to such Bank such additional amount or
amounts as will compensate such Bank for such increased cost or reduction
within 15 days after demand by such Bank. A certificate of such Bank setting
forth the basis for determining such additional amount or amounts necessary to
compensate such Bank shall be conclusive in the absence of manifest error.
Each such Bank will designate a different Applicable Lending Office if such
designation would avoid the need for, or reduce the amount of such compensation
and would not, in the judgment of such Bank, be otherwise disadvantageous to
such Bank. In the event that the Company is required to compensate any Bank
for any increased cost to such Bank pursuant to this Section 5.3(a), the
Company shall have the right, upon at least five Business Days' prior notice to
such Bank through the Agent, to prepay in full any outstanding Fixed Rate Loans
that are related to such increased cost of such Bank, together with accrued
interest thereon to the date of prepayment; provided that prepayment of
such Fixed Rate Loans shall not relieve the Company of its obligation
to compensate such Bank in accordance with this Section 5.3(a), the amount
of which compensation shall be due at the time of such prepayment,
notwithstanding any other provision of this Section 5.3(a). Concurrently with
prepaying each such Fixed Rate Loan of such Bank, the Company shall borrow a
Floating Rate Loan (or, if the Company shall so elect in its notice of
prepayment, a Fixed Rate Loan of another type) in an equal principal amount
from such Bank for an Interest Period coinciding with the remaining term of the
Interest Period applicable to such Fixed Rate Loan, and such Bank shall make
such a Floating Rate Loan (or Fixed Rate Loan of the other type), provided that
there has been no acceleration of the amount due under the Notes pursuant to
Article IX. The Company shall pay compensation owing to any Bank(s) under this
Section 5.3(a) notwithstanding any subsequent replacement (pursuant to Section
11.13) of the Bank(s) making demand for such compensation.
(b) In the event that any applicable law, treaty, rule or
regulation (whether domestic or foreign) now or hereafter in effect and whether
or not presently applicable to any Bank or the Agent, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank or the Agent
with any guideline, request or directive of any such authority (whether or not
having the force of law), including any risk-based capital guidelines, affects
or would affect the amount of capital required or expected to be maintained by
such Bank or the Agent (or any corporation controlling such Bank or the Agent)
and such Bank or the Agent, as the case may be, determines that the amount of
such capital is increased by or based upon the existence of such Bank's or the
Agent's
MASCOTECH, INC. CREDIT AGREEMENT
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obligations or Loans hereunder and such increase has the effect of
reducing the rate of return on such Bank's or the Agent'sE(or such controlling
corporation's) capital as a consequence of such obligations or Loans hereunder
to a level below that which such Bank or the Agent (or such controlling
corporation) could have achieved but for such circumstances (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank or the Agent to be material, then such Bank or the Agent may notify
the Company of any such fact of which it has knowledge and the Company shall pay
to such Bank or the Agent, as the case may be, from time to time, upon request
by such Bank (with a copy of such request to be provided to the Agent) or the
Agent, additional amounts sufficient to compensate such Bank or the Agent (or
such controlling corporation) for any increase in the amount of capital and
reduced rate of return which such Bank or the Agent reasonably determines to be
allocable to the existence of such Bank's or the Agent'sEobligations or Loans
hereunder; provided that, if such Bank or the Agent fails to notify the Company
of any such fact promptly upon becoming aware thereof or, if such Bank or the
Agent is contesting the cause of such increase in the amount of capital or
reduced rate of return, promptly after the earlier of (A) the final
determination of such contest or (B) an officer of such Bank who is responsible
for the administration of the credit outstanding under this Agreement from such
Bank to the Company becoming aware of any such fact, such Bank or the Agent, as
the case may be, shall not be entitled to such compensation for the period
before the date on which it actually notifies the Company of such fact;
provided, further, that if such Bank or the Agent is contesting the cause of
such increase in the amount of capital or reduced rate of return, such Bank or
the Agent, as the case may be, shall not in any event be entitled to such
compensation for any period prior to six months before it notifies the Company
that such Bank or the Agent, as the case may be, may or will demand such
compensation. A statement as to the amount of such compensation, prepared in
good faith and in reasonable detail by such Bank or the Agent, as the case may
be, and submitted by such Bank or the Agent to the Company, shall be conclusive
in the absence of manifest error in computation. The Company shall pay such
compensation for the periods covered by such notice notwithstanding any
replacement (pursuant to Section 11.13) of the Bank(s) making demand for such
compensation.
5.4 Substitute Loans. If (a) the obligation, if any, of any Bank to
make any type of Fixed Rate Loans has been suspended pursuant to Section 5.2 or
(b) any Bank has demanded compensation under Section 5.3(a) and the Company
shall, by at least five Business Days' prior notice to such Bank through the
Agent, have elected that the provisions of this Section 5.4 shall apply to such
Bank, then, unless and until such Bank notifies the Company that the
circumstances giving rise to such suspension or demand for compensation no
longer apply:
(i) all Loans which would otherwise be made by such Bank as the
affected type of Fixed Rate Loans shall be made instead as Floating Rate
Loans, or if the Company shall so elect in the Notice of Borrowing, another
type of Fixed Rate Loan (whichever type is not affected by such
circumstances) for an Interest Period coincident with the related Fixed
Rate Borrowing, and
(ii) after each of its affected Fixed Rate Loans has been repaid,
all payments of principal which would otherwise be applied to repay such
Fixed Rate Loans shall be applied to repay its Substitute Loans instead.
5.5 Funding Losses. If the Company makes any payment of principal with
respect to any Fixed Rate Loan on any other date than the last day of an
Interest Period applicable thereto (whether pursuant to Section 3.8, 4.2, 5.1,
5.2, 5.3 or 5.4, Article IX or otherwise), or if the Company fails to borrow any
Fixed Rate Loan after the related Notice of Borrowing has been given to the
Agent, or if the Company fails to make any payment of principal or interest in
respect of a Fixed Rate Loan when due, the Company shall reimburse each Bank on
demand for any resulting loss or expense incurred by such Bank, including
without limitation any loss incurred in obtaining, liquidating or employing
deposits from third parties, whether or not such Bank shall have funded or
committed to fund such Loan. A statement as to the amount of such loss or
expense, prepared in good faith and in reasonable detail by such Bank and
submitted by such Bank to the Company,
MASCOTECH, INC. CREDIT AGREEMENT
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shall be conclusive and binding for all purposes absent manifest error
in computation. Calculation of all amounts payable to each Bank under this
Section 5.5 shall be made as though such Bank shall have actually funded or
committed to fund the relevant Fixed Rate Loan through the purchase of an
underlying deposit in an amount equal to the amount of such Loan and having a
maturity comparable to the related Interest Period; provided, however, that
such Bank may fund any Fixed Rate Loan in any manner it sees fit and the
foregoing assumption shall be utilized only for the purpose of calculation of
amounts payable under this Section 5.5.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to the Agent and the Banks that:
6.1 Corporate Existence and Power. Each of the Company and its
Domestic Subsidiaries is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of its incorporation, and is duly
qualified as a foreign corporation in each State or other jurisdiction in the
United States of America in which the conduct of its operations or the ownership
of its properties requires such qualification and failure so to qualify would
materially and adversely affect the Company and its Subsidiaries taken as a
whole. All of such corporations have all requisite corporate power to own their
properties and to carry on their businesses, considered as a whole,
substantially as now owned and as now being conducted. The Company has full
power, authority and legal right to execute and deliver this Agreement and the
Notes, to perform and observe the terms and provisions hereof and thereof, and
to borrow hereunder.
6.2 Corporate Authority; No Violations; Governmental Filings; Etc. The
execution, delivery and performance by the Company of this Agreement, the
issuance of the Notes and the borrowings hereunder have been duly authorized by
all necessary corporate action and do not and will not violate the provisions of
any applicable law or regulation or of the certificate of incorporation or
by-laws of the Company or any Subsidiary or any order of any court, regulatory
body or arbitral tribunal and do not and will not result in the breach of, or
constitute a default or require any consent under, or create any lien, charge or
encumbrance upon any property or assets of the Company or any Subsidiary
pursuant to, any indenture or other agreement or instrument to which the Company
or any Subsidiary is a party or by which the Company or any Subsidiary or its
property may be bound or affected. Neither the execution, delivery and
performance of this Agreement nor the issuance of the Notes nor any borrowing
hereunder requires, for the validity thereof, nor does the enforceability of
this Agreement or any of the Notes require, any filing with, or consent,
authorization or approval of, any state or federal agency or regulatory
authority, other than filings, consents or approvals which have been made or
obtained or which, in the case of any such borrowing, will be made or obtained
prior to the due date for such filing, consent or approval.
6.3 Binding Effect. This Agreement constitutes, and the Notes when
executed and delivered by the Company for value will constitute, the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
6.4 Litigation. There are no suits, proceedings, or actions at law or
in equity or by or before any governmental commission, board, bureau, or other
administrative agency, pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries or affecting the Company or any
of its Subsidiaries, which, in the reasonable opinion of the Company, either (i)
are likely to have a material adverse effect on the financial condition or
business of the Company and its Subsidiaries taken as a whole or (ii) will in
any manner affect the enforceability or validity of this Agreement or any Note.
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6.5 Taxes. The Company and each Subsidiary has filed (or has obtained
extensions of the time by which it is required to file) all United
States federal income tax returns, and all other tax returns which are required
to be filed and are material to the business, operations or financial position
of the Company and its Subsidiaries taken as a whole, and has paid all taxes
shown due pursuant to such returns or pursuant to any assessment received by
the Company or any Subsidiary, except such taxes, if any, as are being
contested in good faith and as to which, in the reasonable opinion of the
Company, adequate reserves have been provided in accordance with generally
accepted accounting principles. The Company does not know of any proposed tax
assessment against it or any Subsidiary or of any basis for one, except to the
extent any such assessment has been, in the reasonable opinion of the Company,
adequately provided for in the consolidated tax reserves of the Company and its
Subsidiaries in accordance with generally accepted accounting principles.
6.6 Financial Condition. The consolidated balance sheet of the Company
and its Consolidated Subsidiaries and consolidated statements of income,
shareholders' equity and cash flows of the Company and its Consolidated
Subsidiaries for the fiscal year ended December 31, 1995, certified by Coopers &
Lybrand, independent certified public accountants, and the interim unaudited
consolidated balance sheet and interim unaudited consolidated statements of
income, shareholders' equity and cash flows of the Company and its Consolidated
Subsidiaries, as of or for the nine-month period ended on September 30, 1996,
copies of which have been furnished to the Banks, fairly present the
consolidated financial position of the Company and its Consolidated Subsidiaries
as at the dates thereof, and the consolidated results of operations of the
Company and its Consolidated Subsidiaries for the respective periods indicated,
all in accordance with generally accepted accounting principles consistently
applied (except as disclosed in the notes thereto and subject, in the case of
interim statements, to year-end audit adjustments). Except as disclosed in the
financial statements as of or for the nine-month period ended September 30,
1996, there has been no material adverse change in the consolidated operations
or condition, financial or otherwise, of the Company and its Consolidated
Subsidiaries considered as a whole, since December 31, 1995.
6.7 Compliance with ERISA. Each of the Company and each ERISA
Affiliate of the Company (a) has fulfilled its obligations under the minimum
funding standards of ERISA and the Code with respect to each Plan and (b) is in
compliance in all material respects with the presently applicable provisions of
ERISA and the Code with respect to each Plan. Neither the Company nor any ERISA
Affiliate of the Company has (x) sought a waiver of the minimum funding standard
under Section 412 of the Code in respect of any Plan, (y) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Code, in each case securing an
amount greater than $10,000,000, or (z) incurred any liability under Title IV of
ERISA, other than a liability to the PBGC for premiums under Section 4007 of
ERISA, which could materially adversely affect the business, consolidated
financial position or consolidated results of operations of the Company and its
Consolidated Subsidiaries.
6.8 Environmental Matters. In the ordinary course of its business, the
Company conducts appropriate reviews of the effect of Environmental Laws on the
business, operations and properties of the Company and its Subsidiaries, in the
course of which it identifies and evaluates pertinent liabilities and costs
(including, without limitation, capital or operating expenditures required for
clean-up or closure of properties presently or previously owned or for the
lawful operation of its current facilities, required constraints or changes in
operating activities, and evaluation of liabilities to third parties, including
employees, together with
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pertinent costs and expenses). On the basis of this review, the Company has
reasonably concluded that Environmental Laws are not likely to have a material
adverse effect on the business, financial position or results of operations of
the Company and its Consolidated Subsidiaries, considered as a whole.
6.9 Compliance with Laws. The Company complies, and has caused each
Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder), except where (a) the necessity of compliance therewith
is contested in good faith by appropriate proceedings and the Company has
established appropriate reserves for liability for noncompliance therewith in
accordance with generally accepted accounting principles, (b) no officer of the
Company is aware that the Company or the relevant Subsidiary has failed to
comply therewith, or (c) the Company has reasonably concluded that failure to
comply is not likely to have a material adverse effect on the business,
financial position or results of operations of the Company and its Consolidated
Subsidiaries, taken as a whole.
ARTICLE VII.
COVENANTS
Until all the Commitments and Letters of Credit have expired or been
terminated and all Loans and reimbursement and other obligations of the Company
hereunder have been paid in full, the Company covenants that:
7.1 Financial Statements. The Company will deliver to each of the
Banks:
(a) as soon as practicable and in any event within 46 days after
the end of each of the first three fiscal quarters of each fiscal year of the
Company, (i) an unaudited consolidated balance sheet of the Company and its
Consolidated Subsidiaries, as at the end of each such quarter, and (ii)
unaudited consolidated statements of income and cash flows of the Company and
its Consolidated Subsidiaries, for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting forth in
each of the statements required by this subsection (a), in comparative form,
corresponding figures as of the end of and for the corresponding period of the
preceding fiscal year, all in reasonable detail and duly certified (subject to
year-end audit adjustments) by the chief financial officer or chief accounting
officer of the Company as having been prepared in all material respects in
accordance with generally accepted accounting principles and as to fairness of
presentation;
(b) as soon as practicable and in any event within 90 days after the
end of each fiscal year of the Company, (i) a consolidated balance sheet of the
Company and its Consolidated Subsidiaries, as at the end of such year, and (ii)
consolidated statements of income, shareholders' equity, and cash flows of the
Company and its Consolidated Subsidiaries for such year, setting forth in each
of the statements required by this subsection (b), in comparative form,
corresponding figures as of the end of and for the preceding fiscal year, and
all in reasonable detail and certified without material qualifications by
Coopers & Lybrand, or by other independent certified public accountants of
recognized national standing selected by the Company and reasonably acceptable
to the Agent;
(c) as soon as practicable and in any event within 30 days after
the sending or filing thereof, copies of all such financial statements and
reports as it shall send to its security holders and of all final prospectuses
under the Securities Act of 1933 (other than form S-8), reports on forms 10-Q,
10-K and 8-K and all similar regular and periodic reports filed by it (i) with
any federal department, bureau, commission or agency from time to time having
jurisdiction with respect to the sale of securities or (ii) with any securities
exchange;
(d) if and when the Company or any ERISA Affiliate of the Company
(i) gives or is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with
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respect to any Plan which might constitute grounds for a termination of
such Plan under Title IV of ERISA, or knows that the plan administrator of any
Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to
the PBGC; (ii) receives notice of complete or partial withdrawal liability
under Title IV of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such notice;
(iii) receives notice from the PBGC under Title IV of ERISA of an intent to
terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer, any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Code, a copy of such application; (v) gives notice of intent
to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails
to make any payment or contribution to any Plan or Multiemployer Plan or in
respect of any Benefit Arrangement or makes any amendment to any Plan or
Benefit Arrangement which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security, a certificate of the chief
financial officer or the chief accounting officer of the Company setting forth
details as to such occurrence and action, if any, which the Company or
applicable ERISA Affiliate is required or proposes to take; provided that no
such certificate shall be required unless the aggregate unpaid actual or
potential liability of the Company and the ERISA Affiliates involved in all
events referred to in clauses (ii) through (vii) above of which officers of the
Company have obtained knowledge and have not previously reported under this
subparagraph (d) exceeds $15,000,000; and
(e) with reasonable promptness, such other information regarding
the financial condition of the Company or any of its Subsidiaries as any Bank
may from time to time reasonably request.
7.2 Certificates of No Default and Compliance.
(a) Concurrently with each delivery of the financial statements
pursuant to subsections (a) and (b) of Section 7.1, the Company will deliver to
the Agent (with a copy delivered to each Bank) a certificate, signed by the
chief accounting officer or chief financial officer of the Company (i) stating
that to the best of his knowledge after due inquiry, at the date of such
financial statements no Default had occurred and was continuing, or, if a
Default had occurred and was continuing, specifying the nature and period of
existence thereof and what action the Company has taken or proposes to take with
respect thereto; and (ii) setting forth as of the date of such financial
statements, in reasonable detail, the calculations employed to determine
compliance with Sections 7.5, 7.7, 7.8 and 7.9 and an explanation in reasonable
detail of any differences between generally accepted accounting principles as
then in effect and generally accepted accounting principles used in making such
calculations, as may be permitted under Section 1.2. The certificate will be
accompanied by a calculation of the ratio of (i) Senior Debt as of the end of
such fiscal quarter to (ii) EBITDA Minus Capital Expenditures as of the end of
such fiscal quarter (calculated on a pro forma basis as appropriate).
(b) Within 60 days after the end of each fiscal quarter of each
fiscal year of the Company (including the last fiscal quarter of each such
fiscal year), the Company will deliver to the Agent (with a copy delivered to
each Bank) a certificate, signed by the chief accounting officer, chief
financial officer, treasurer or assistant treasurer of the Company, setting
forth in reasonable detail the calculation of the Senior Leverage Ratio and the
Interest Coverage Ratio, as of the Determination Date and for the Determination
Period, respectively, with respect to the next forthcoming Application Period,
and identifying the Applicable Margin for such Application Period as a result of
such calculations.
(c) Within fifteen Business Days after any officer of the Company
obtains knowledge of a Default, the Company will, unless the same shall have
been cured within such fifteen Business Day period, give written notice to each
of the Banks thereof, specifying the nature thereof, the period of existence
thereof and what action the Company proposes to take with respect thereto.
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7.3 Preservation of Corporate Existence, Etc. The Company will preserve
and maintain its corporate existence, and qualify and remain qualified as a
validly existing corporation in good standing in each jurisdiction in which the
conduct of its operations or the ownership of its properties requires such
qualification and failure so to qualify would materially and adversely affect
the Company and its Subsidiaries taken as a whole.
7.4 Current Ratio. [Intentionally Omitted]
7.5 Total Leverage Ratio. The Company will not permit or suffer the
Total Leverage Ratio to be greater than (a) 3.75 to 1.0 as of the last day of
any fiscal quarter of the Company occurring during the period from January 1,
1997 through December 30, 1998, (b) 3.00 to 1.0 as of the last day of any fiscal
quarter of the Company during the period from December 31, 1998 through December
30, 1999, (c) 2.75 to 1.0 as of the last day of any fiscal quarter of the
Company during the period from December 31, 1999 through December 30, 2000 or
(d) 2.50 to 1.0 as of the last day of any fiscal quarter of the Company
thereafter.
7.6 Net Worth. [Intentionally Omitted].
7.7 Tangible Capital Funds. The Company will not permit or suffer
Tangible Capital Funds to at any time be less than the sum of (a) $450,000,000
plus (b) 66-2/3% of Net Income Minus Preferred Dividends for the period from
January 1, 1998 through the then latest fiscal year end of the Company; provided
that for purposes of this Section 7.7, Net Income shall exclude the pre-tax
amount attributable to recognition of the Deferred Trimas Gain and the Deferred
MSX Gain or any portion thereof as income.
7.8 Senior Debt Coverage Ratio.
(a) The Company will not permit or suffer the Senior Debt
Coverage Ratio to be greater than 5.00 to 1.00 at any time.
(b) In addition, if as of the last day of each of any two
consecutive fiscal quarters of the Company, the Total Leverage Ratio is equal to
or greater than 1.00 to 1.00, the Company will not permit or suffer the Senior
Debt Coverage Ratio to be greater than the Maximum Allowed Senior Debt Coverage
Ratio as of the Relevant Days immediately following both of such fiscal
quarters.
(c) As used in this Section 7.8, the term "Maximum Allowed Senior
Debt Coverage Ratio" means (i) 3.75 to 1.00 on the Relevant Day immediately
following the last day of any fiscal quarter of the Company ending during the
period from the Closing Date through June 30, 1997, (ii) 3.50 to 1.00 on the
Relevant Day immediately following the last day of any fiscal quarter of the
Company ending during the period from July 1, 1997 through December 31, 1998,
and (iii) 3.00 to 1.00 on the Relevant Day immediately following the last day of
any fiscal quarter of the Company ending after December 31, 1998. For purposes
of this Section 7.8, all Senior Debt which is repaid with cash received by the
Company from Masco Corporation for the purchase of preferred stock or
subordinated debt securities pursuant to the Securities Purchase Agreement
within forty-five days after the last day of any fiscal quarter of the Company
shall be deemed repaid as of the last day of such fiscal quarter, and during
such forty-five day period no Default shall be deemed to have occurred due to
noncompliance with this Section 7.8.
7.9 Subsidiary Indebtedness. The Company will not permit or suffer the
aggregate amount of Debt of its Subsidiaries (other than Debt owing to the
Company or any of its Subsidiaries) at any time to be greater than 15% of the
sum of (a) Senior Debt plus (b) the unused amount of the Commitments.
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7.10 Negative Pledge. Neither the Company nor any Consolidated
Subsidiary will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal amount
not exceeding $25,000,000;
(b) any Lien existing on any asset of any corporation at the time such
corporation becomes a Consolidated Subsidiary and not created in
contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such asset
(or acquiring a corporation or other entity which owned such asset),
provided that such Lien attaches to such asset concurrently with or within
90 days after such acquisition;
(d) any Lien on any asset of any corporation existing at the time such
corporation is merged or consolidated with or into the Company or a
Consolidated Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition thereof by
the Company or a Consolidated Subsidiary and not created in contemplation
of such acquisition;
(f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section, provided that such Debt is not increased and is
not secured by any additional assets;
(g) any Lien in favor of the holder of Debt (or any Person acting for
or on behalf of such holder) arising pursuant to any order of attachment,
distraint or similar legal process arising in connection with court
proceedings so long as the execution or other enforcement thereof is
effectively stayed and the claims secured thereby are being contested in
good faith by appropriate proceedings and the Company or such Consolidated
Subsidiary, as the case may be, has established appropriate reserves
against such claims in accordance with generally accepted accounting
principles;
(h) Liens incidental to the normal conduct of its business or the
ownership of its assets which (i) do not secure Debt and (ii) do not in the
aggregate materially detract (due to the amount of the liability secured by
such Liens or otherwise) from the value of the assets of the Company and
the Company's Consolidated Subsidiaries taken as a whole or in the
aggregate materially impair the use thereof in the operation of the
business of the Company and the Company's Consolidated Subsidiaries taken
as a whole; and
(i) Liens not otherwise permitted by the foregoing clauses of this
Section; provided that (i) the aggregate outstanding principal amount of
Debt secured by all such Liens on Current Assets shall not at any time
exceed 20% of Current Assets and (ii) the aggregate outstanding principal
amount of Debt secured by all such Liens (including Liens referred to in
clause (i) of this proviso) shall not at any time exceed the sum of 5% of
Net Worth plus 20% of Current Assets, provided, further, that for purposes
of this Section 7.10(i), Current Assets shall not include any assets that
are classified as Current Assets solely because they are held for sale;
provided, however, that the restrictions set forth in this Section 7.10 shall
not apply to "margin stock" (as defined in Regulation U of the Board of
Governors of the Federal Reserve System), if and to the extent that the value
of the margin stock with respect to which the rights of the Company and its
Subsidiaries are
MASCOTECH, INC. CREDIT AGREEMENT
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restricted by this Section 7.10 would otherwise exceed 25% of the value
of all assets with respect to which the rights of the Company and its
Subsidiaries are restricted by this Section 7.10.
7.11 Dispositions of Assets; Mergers and Consolidations; Restricted
Transfers.
(a) The Company will not (i) directly or indirectly sell, lease,
transfer or otherwise dispose of all or substantially all of its assets or (ii)
merge or consolidate with any other Person unless the Company shall be the
continuing or surviving corporation of such merger or consolidation.
(b) The Company will not, and will not permit any Consolidated
Subsidiary to, directly or indirectly make a Restricted Transfer of its assets
to any Person if, immediately after giving effect thereto, the aggregate amount
of assets disposed of in all Restricted Transfers by the Company and its
Consolidated Subsidiaries in the twelve months then ended would exceed 15% of
the total assets of the Company and its Consolidated Subsidiaries as shown on
the most recent balance sheet delivered to the Banks under Section 7.1;
provided, for purposes of this Section 7.11(b), the aggregate amount of assets
disposed of in all Restricted Transfers by the Company and the Consolidated
Subsidiaries prior to the Closing Date shall be deemed to be equal to zero. For
purposes of this subsection (b), the term "Restricted Transfer" means a direct
or indirect sale, lease, transfer or other disposition of assets (other than
cash, margin stock, or the sale of inventory in the ordinary course of
business) to any Person (other than the Company or a Substantially-Owned
Consolidated Subsidiary) if, and to the extent that, in connection with such
transaction (and as a substantial part of the consideration incident thereto),
the Company or any Consolidated Subsidiary receives an equity ownership interest
in such Person or any right to receive payments which are specifically
contingent in amount or duration upon the earnings of such Person or any portion
of such Person's business.
(c) Notwithstanding any other provision of this Section 7.11, no
disposition of assets, merger, consolidation or Restricted Transfer referred to
in subsection (a) or (b) of this Section shall be permitted if, immediately
after giving effect thereto, any Default would exist.
7.12 Changes in Subordinated Debt. The Company will not (a) transfer,
convey, assign or deliver to any holder of any Subordinated Debt, or to any
trustee, paying agent or other fiduciary for the benefit of the holder of any
Subordinated Debt (including any defeasance), any cash, securities (other than
securities constituting Subordinated Debt) or other assets of the Company or any
Subsidiary in payment or on account of, or as provision for, principal, premium,
if any, or interest on any Subordinated Debt which is not required under the
instruments and agreements relating to such Subordinated Debt (provided that any
payment which is blocked by any creditors of the Company or any of its
Subsidiaries pursuant to the terms of the applicable instrument or agreement
shall not be deemed to be required) or (b) or amend, modify or waive any term or
provision of any instrument or agreement relating to any Subordinated Debt such
that it would not constitute "Subordinated Debt" as defined herein if (i) at the
time of any such transfer, conveyance, assignment, delivery, amendment,
modification or waiver there shall exist and be continuing, or if immediately
after giving effect thereto as a reasonably foreseeable result thereof on a pro
forma basis there would exist or would be caused thereby, an Event of Default or
Default, or (ii) unless the Agent is given at least five (5) Business Days (or
such shorter period of time acceptable to the Agent) prior notice thereof, any
such transfer, conveyance, assignment or delivery is made more than seven (7)
days in advance of a scheduled payment or prepayment on any Subordinated Debt or
in an amount in excess of the amount of such scheduled payment or prepayment.
7.13 Use of Proceeds. None of the proceeds of the Loans made under this
Agreement will be used in violation of any applicable law or regulation
including, without limitation, Regulation U of the Board of Governors of the
Federal Reserve System.
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7.14 Fiscal Year. The Company will not change its fiscal year from
beginning on JanuaryE1 of the calendar year and ending on December 31 of the
calendar year.
7.15 Compliance with Laws. The Company will comply, and cause each
Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) except where (a) the necessity of compliance therewith
is contested in good faith by appropriate proceedings, (b) no officer of the
Company is aware that the Company or the relevant Subsidiary has failed to
comply therewith or (c) the Company has reasonably concluded that failure to
comply is not likely to have a material adverse effect on the business,
financial position or results of operations of the Company and its Consolidated
Subsidiaries, taken as a whole.
ARTICLE VIII.
CONDITIONS OF BORROWINGS AND LETTER OF CREDIT ISSUANCES
The obligation of the Agent to issue any Letter of Credit, the obligation
of each Bank to make a Syndicated Loan on the occasion of each Syndicated
Borrowing hereunder, and the willingness of any Bank to consider, in its sole
discretion, making any Bid-Option Loan hereunder, is subject to the performance
by the Company of all its obligations under this Agreement and to the
satisfaction of the following further conditions:
8.1 Each Borrowing and Letter of Credit Issuance. In the case of each
Borrowing (other than a Floating Rate Borrowing deemed disbursed under Section
3.3(e)) and Letter of Credit Issuance hereunder:
(a) Receipt by the Agent of (i) in the case of each Borrowing,
the Notice of Borrowing from the Company containing any information required by
Section 3.2 or 3.4, as the case may be, and (ii) in the case of each Letter of
Credit Issuance, the Request for Letter of Credit Issuance from the Company as
required by Section 3.3, in each case signed by an officer or any other employee
of the Company previously designated to the Agent in writing by the Chairman,
President or any Vice President of the Company as having authority until further
notice to request a Borrowing or Letter of Credit Issuance under this Agreement,
and, in the case of each Letter of Credit Issuance, together with an application
for the related Letter of Credit and other related documentation requested by
and acceptable to the Agent appropriately completed and duly executed by such
designated officer or other employee and all fees required under Section 3.3(c);
(b) The fact that both before and at the conclusion of the
Borrowing or Letter of Credit Issuance: (i) in the case of a Refunding
Borrowing, no Event of Default shall have occurred and be continuing and (ii) in
the case of any other Borrowing or any Letter of Credit Issuance, no Default
shall have occurred and be continuing;
(c) The fact that the representations and warranties contained in
this Agreement (except, in the case of a Refunding Borrowing, the
representations and warranties set forth in Section 6.4(i), Section 6.5, the
last sentence of Section 6.6, clause (a) of the first sentence of Section 6.7
and Sections 6.8 and 6.9) shall be true and correct in all material respects or,
with respect to such representations and warranties that include a materiality
standard, in all respects, on and as of the date of such Borrowing or Letter of
Credit Issuance with the same force and effect as if made on and as of such
date; and
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(d) Receipt by the Agent of such other opinions, documents,
evidence, materials and information with respect to the matters contemplated
hereby as the Agent or the Required Banks may reasonably request.
Each Borrowing by the Company and Letter of Credit Issuance pursuant to this
Agreement, including the first such Borrowing or Letter of Credit Issuance,
shall be deemed to be a representation and warranty by the Company on the date
of such Borrowing or Letter of Credit Issuance as to the facts specified in
clauses (b) and (c) of this Section 8.1.
8.2 Initial Borrowing or Letter of Credit Issuance. In the case of the
initial Borrowing or Letter of Credit Issuance pursuant to this Agreement:
(a) Receipt by the Agent for the account of each Bank of a duly
executed Syndicated Note and a duly executed Bid-Option Note, each dated on or
before the date of such Borrowing or Letter of Credit Issuance; and
(b) Receipt by the Agent of all the items, and completion of all
the matters, required by Section 8.3.
8.3 Closing. On or prior to the Closing Date, the Company shall
furnish to the Banks the following items, and the following matters shall be
completed:
(a) An opinion of counsel for the Company, substantially in the
form of ExhibitEM hereto, and covering such other matters as any Bank may
reasonably request, dated the Closing Date;
(b) An opinion of Dickinson, Wright, Moon, Van DusenE& Freeman,
special counsel for the Agent, substantially in the form of Exhibit N hereto,
dated the Closing Date;
(c) Certified copies of all corporate action taken by the Company
to authorize the execution, delivery and performance of this Agreement and the
Notes, and the Borrowings and Letter of Credit Issuances hereunder, and such
other corporate documents and other papers as any Bank may reasonably request,
including, without limitation, certified copies of the Company's articles of
incorporation and by-laws;
(d) A certificate of a duly authorized officer of the Company,
dated the Closing Date, as to the incumbency, and setting forth a specimen or
facsimile signature, of each of the persons (i) who has signed this Agreement on
behalf of the Company; (ii) who has signed the Notes on behalf of the Company;
and (iii) who will, until replaced by other persons duly authorized for that
purpose, act as the representatives of the Company for the purpose of
signing documents in connection with this Agreement and the transactions
contemplated hereby;
(e) A certificate of a senior officer of the Company to the
effect set forth in Section 8.1(b) and (c);
(f) The closing fees payable under Section 3.7, which shall be
paid to the Agent for the account of the Banks;
(g) A certificate, signed by the chief accounting officer or
chief financial officer of the Company, setting forth in reasonable detail the
calculations of the Senior Leverage Ratio as of December 31, 1996 and the
Interest Coverage Ratio for the period of four consecutive fiscal quarters of
the Company
MASCOTECH, INC. CREDIT AGREEMENT
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ending December 31, 1996, and identifying the Applicable Margin for
the period from the Closing Date to the beginning of the next Application Period
as a result of such calculations; and
(h) The Company shall pay all Existing Loans, all interest due
thereon and all fees and other liabilities owing pursuant to the Existing Credit
Agreement, other than the principal and interest due on the Existing Bid-Option
Loans.
ARTICLE IX.
EVENTS OF DEFAULT AND REMEDIES
9.1 Events of Default. If any one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) The Company shall fail to pay when due any installment of
principal of any Note or shall fail to pay within five days of the due date
thereof any interest on any Note or any facility fee, closing fee, Letter
of Credit fee, or Agent'sEfee payable under this Agreement, or any
reimbursement obligation under Section 3.3 (unless satisfied by the deemed
disbursement of Floating Rate Loans); or
(b) The Company shall fail to observe or perform any covenant
contained in any of Sections 7.3, 7.5 to 7.12 inclusive and 7.14; or
(c) The Company shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clauses
(a) and (b) above) for thirty (30) days after written notice thereof has
been given to the Company by any Bank or the Agent; or
(d) Any representation or warranty of the Company or any officer
of the Company to the Banks contained herein or in any certificate,
statement or report furnished to the Banks hereunder shall prove to have
been incorrect or misleading in any material respect on the date when made
or deemed made, provided that, if any representation and warranty deemed to
have been made by the Company pursuant to the last sentence of Section 8.1
as to the satisfaction of the condition of borrowing set forth in clause
(b)(i) of Section 8.1 shall have been incorrect solely by reason of the
existence of an Event of Default of which the Company was not aware when
such representation and warranty was deemed to have been made and which was
cured before or promptly after the Company became aware thereof, then such
representation and warranty shall be deemed not to have been incorrect in
any material respect; or
(e) The Company or any Significant Subsidiary shall fail to pay at
maturity, or within any applicable period of grace, any Debt (other than a
Loan and other than Acquired Debt in an aggregate outstanding principal
amount not exceeding $15,000,000) having an aggregate principal amount in
excess of $5,000,000, and such failure has not been waived, or shall fail
to observe or perform any term, covenant or agreement (other than such a
term, covenant or agreement to or for the benefit of a Bank or Affiliate
thereof restricting the sale, pledge or other disposition by the Company or
any Significant Subsidiary of "margin stock" having a value in excess of
25% of the value of the assets referred to in Section 221.2(g)(2)(i) of
Regulation U unless the Board of Governors of the Federal Reserve System or
its staff advises the Agent in writing that the existence of this
subsectionE(e) without this parenthetical exception would not in such
circumstances render this Agreement "secured directly or indirectly by
margin stock" within the meaning of its
MASCOTECH, INC. CREDIT AGREEMENT
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RegulationEU), contained in any agreement (other than this Agreement)
by which it is bound evidencing or securing indebtedness for borrowed
money (other than Acquired Debt in an aggregate outstanding principal
amount not exceeding $15,000,000) for such period of time as would cause
or permit the holder or holders (or any Persons acting for or on behalf of
such holder or holders) thereof or of any obligations issued thereunder to
accelerate the maturity thereof or of any such obligations in an aggregate
principal amount in excess of $5,000,000, and such failure has not been
waived; provided that for purposes of this subsection (e), a failure by
the Company or any Significant Subsidiary to observe or perform any term,
covenant or agreement in respect of the industrial revenue bonds
identified on ScheduleE2 attached hereto, or to pay on the due date
therefor the debt outstanding thereunder, shall not be deemed a Default or
contribute to the $5,000,000 aggregate limitation set forth above, so long
as the Company or such Significant Subsidiary satisfies all obligations to
pay premium, if any, principal of, and interest when due on such bonds
(whether or not related to an acceleration of maturity) within five days
after the due date therefor; or
(f) The Company or any Significant Subsidiary shall (i) apply for
or consent to the appointment of a receiver, custodian, trustee, liquidator
or the like of itself or of a significant portion of its assets; (ii) be
unable or admit in writing its inability to pay its debts as they mature;
(iii) make a general assignment for the benefit of creditors; (iv) be
adjudicated a bankrupt or insolvent; or (v) file a voluntary petition in
bankruptcy or a petition or an answer seeking reorganization or an
arrangement with creditors or to take advantage of any insolvency law, or
any answer admitting the material allegations of a petition filed against
it in any bankruptcy, reorganization or insolvency proceedings, or a
resolution of either the shareholders or the Board of Directors of such
corporation shall be adopted for the purpose of effecting any of the
foregoing; or
(g) A proceeding shall be instituted without the application,
approval or consent of the Company or any Significant Subsidiary in any
court of competent jurisdiction seeking, in respect of the Company or such
Significant Subsidiary, adjudication in bankruptcy, dissolution, winding
up, reorganization, a composition or arrangement with creditors, a
readjustment of debts, the appointment of a receiver, custodian, trustee,
liquidator or the like of the Company or such Significant Subsidiary or of
a significant portion of its assets, or other like relief in respect of
the Company or such Significant Subsidiary under any insolvency or
bankruptcy law, and the same shall continue undismissed or unstayed and in
effect for any period of sixty consecutive days; or
(h) Final judgment for the payment of money in excess of
$1,000,000 in amount shall be rendered by a court of record against the
Company or any Significant Subsidiary and the Company or such Significant
Subsidiary shall not discharge the same or provide for its discharge, or
procure a stay of execution thereof, within sixty days from the date of
entry thereof, and within said period of sixty days or such longer period
during which execution of such judgment shall have been stayed, move to
vacate said judgment or appeal therefrom and cause the execution thereof to
be stayed pending determination of such motion or during such appeal; or
(i) The Company or any ERISA Affiliate of the Company shall fail
to pay when due an amount or amounts aggregating in excess of $1,000,000
which it shall have become liable to pay to the PBGC or to a Plan under
Title IV of ERISA; or notice of intent to terminate a Plan or Plans having
aggregate Unfunded Benefit Liabilities in excess of $25,000,000
(collectively, a "Material Plan") shall be filed under Title IV of ERISA by
the Company or any ERISA Affiliate of the Company, any plan administrator
or any combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a trustee to
be appointed to administer any Material Plan and such proceeding shall not
have been dismissed within thirty days thereafter; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or
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(j)(i) Any Person or "group" (within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended), other than any
Person in the Masco Group or any group that includes any Person in the
Masco Group (A) shall have acquired beneficial ownership of 25% or more of
the capital stock having ordinary voting power in the election of directors
of the Company or (B) shall obtain the power (whether or not exercised) to
elect a majority of the Company's directors or (ii) the Board of Directors
of the Company shall not consist of a majority of Continuing Directors;
"Continuing Directors" shall mean the directors of the Company on the
Closing Date and each other director, if such other director's nomination
for election to the Board of Directors of the Borrower is recommended by a
majority of the then Continuing Directors;
then, and in each such case, the Agent may and, upon being directed to do so by
the Required Banks, shall, by written notice to the Company, (i) immediately
terminate the Commitments, (ii) declare the principal of and interest accrued
on all the Notes, all unpaid reimbursement obligations in respect of drawings
under Letters of Credit, and all other amounts owing under this Agreement to be
immediately due and payable or (iii) demand immediate delivery of cash
collateral, and the Company agrees to deliver such cash collateral upon demand,
in an amount equal to the maximum amount that may be available to be drawn at
any time prior to the stated expiry of all outstanding Letters of
Credit, or any one or more of the foregoing, whereupon the Commitments shall
terminate forthwith and all such amounts, including such cash collateral, shall
become immediately due and payable without presentment or demand for payment,
notice of non-payment, protest or further notice or demand of any kind, all of
which are expressly waived by the Company; provided, however, that in the case
of the occurrence of any event described in the foregoing clauses (f) and (g)
the Commitments shall automatically terminate forthwith and all such amounts,
including such cash collateral, shall automatically become immediately due and
payable without action upon the part of the Required Banks and without the
requirement of any such notice, and without presentment, demand, protest or
other notice of any kind, all of which are hereby waived. Such cash collateral
delivered in respect of outstanding Letters of Credit shall be deposited in a
special cash collateral account to be held by the Agent as collateral security
for the payment and performance of the Company's obligations under this
Agreement and the Notes to the Banks and the Agent.
9.2 Remedies. The Agent may and, upon being directed to do so by the
Required Banks, shall, in addition to the remedies provided in Section 9.1,
exercise and enforce any and all other rights and remedies available to it or
the Banks, whether arising under this Agreement, the Notes or under applicable
law, in any manner deemed appropriate by the Agent, including suit in equity,
action at law, or other appropriate proceedings, whether for the specific
performance (to the extent permitted by law) of any covenant or agreement
contained in this Agreement or in the Notes or in aid of the exercise of any
power granted in this Agreement or the Notes.
9.3 Set Off. Upon the failure of the Company to pay any indebtedness
under this Agreement or the Notes at its maturity (whether at stated maturity,
by acceleration or otherwise) or, in the case of such indebtedness other than
principal of the Loans, when due (after allowing for any grace period provided
with respect thereto under Section 9.1(a)), each Bank may at any time and from
time to time, without notice to the Company (any requirement for such notice
being expressly waived by the Company) set off and apply against any and all of
the obligations of the Company now or hereafter existing under this Agreement
and the Notes, whether owing to such Bank or any other Bank or the Agent, any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Bank to or for
the credit or the account of the Company and any property of the Company from
time to time in possession of such Bank, regardless of whether or not such Bank
shall have made any demand hereunder or any indebtedness owing by such Bank may
be contingent and unmatured. The rights of the Banks under this Section 9.3 are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) which the Banks may have.
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ARTICLE X.
THE AGENTS AND THE BANKS
10.1 Appointment and Authorization. Each Bank hereby irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the Notes as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto. The provisions of this Article X are solely for
the benefit of the Agent and the Banks, and the Company shall not have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation towards or relationship of agency or trust with or for
the Company.
10.2 Agent and Affiliates. The Agent in its capacity as a Bank
hereunder shall have the same rights and powers hereunder as any other Bank and
may exercise or refrain from exercising the same as though it were not the
Agent. The Agent and its Affiliates may (without having to account therefor to
any Bank) accept deposits from, lend money to, and generally engage in any kind
of banking, trust, financial advisory or other business with the Company or any
Subsidiary of the Company as if it were not acting as Agent hereunder, and may
accept fees and other consideration therefor without having to account for the
same to the Banks.
10.3 Scope of Agent's Duties. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement, have a fiduciary relationship with any Bank, and no
implied covenants, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or shall otherwise exist against the Agent. As to any
matters not expressly provided for by this Agreement (including, without
limitation, collection and enforcement action under the Notes), the Agent shall
not be required to exercise any discretion or take any action, but may request
instructions from the Required Banks. The Agent shall in all cases be fully
protected from liability to the Banks in acting, or in refraining from acting,
pursuant to the written instructions of the Required Banks or, when expressly
required by this Agreement, all the Banks, which instructions and any action or
omission pursuant thereto shall be binding upon all of the Banks; provided,
however, that the Agent shall not be required to act or omit to act if, in the
judgment of the Agent, such action or omission may expose the Agent to personal
liability or is contrary to this Agreement, any Note, or applicable law.
10.4 Reliance by Agent. The Agent shall be entitled to rely upon any
certificate, notice, document or other communication (including any cable,
telegram, telex, facsimile transmission or oral communication) believed by it to
be genuine and correct and to have been sent or given by or on behalf of a
proper person. The Agent may treat the payee of any Note as the holder thereof.
The Agent may employ agents (including, without limitation, collateral agents)
and may consult with legal counsel (who may be counsel for the Company),
independent public accountants and other experts selected by it and shall not be
liable to the Banks, except as to money or property received by it or its
authorized agents, for the negligence or misconduct of any such agent selected
by it with reasonable care or for any action taken or omitted to be taken by it
in good faith in accordance with the advice of such counsel, accountants or
experts.
10.5 Default. The Agent shall not be deemed to have knowledge of the
occurrence of any Default, unless the Agent has received written notice from a
Bank or the Company specifying such Default and stating that such notice is a
"Notice of Default". In the event that the Agent receives such a notice, the
Agent shall give written notice thereof to the Banks.
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10.6 Liability of Agent. Neither the Agent nor any of its directors,
officers, agents, or employees shall be liable to the Banks for any action taken
or not taken by it or them in connection herewith with the consent or at the
request of the Required Banks or, when expressly required by this Agreement, all
the Banks or in the absence of its or their own gross negligence or willful
misconduct. Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (a) any recital, statement, warranty or representation contained in
this Agreement or any Note, or in any certificate, report, financial statement
or other document furnished in connection with this Agreement, (b) the
performance or observance of any of the covenants or agreements of the Company,
(c) the satisfaction of any condition specified in Article VIII, except as to
the delivery to the Agent of documents that appear on their face to conform to
the requirements of Article VIII (other than requirements of any Bank under
Section 8.3(c) that are not known to the Agent), or (d) the validity,
effectiveness, legal enforceability, value or genuineness of this Agreement, the
Notes, or any other instrument or document furnished in connection herewith.
10.7 Nonreliance on Agent and Other Banks. Each Bank acknowledges and
agrees that it has, independently and without reliance on the Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own credit analysis of the Company and the Company's Subsidiaries and
its own decision to enter into this Agreement, and that it will, independently
and without reliance upon the Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decision in taking or not taking action under this
Agreement. The Agent shall not be required to keep itself informed as to the
performance or observance by the Company of this Agreement, the Notes or any
other documents referred to or provided for herein or to inspect the properties
or books of the Company and, except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any information concerning the affairs, financial condition or
business of the Company or any of its Subsidiaries which may come into the
possession of the Agent or any of its Affiliates.
10.8 Indemnification. The Banks agree to indemnify the Agent (to the
extent not reimbursed by the Company, but without limiting any obligation of the
Company to make such reimbursement), ratably according to their respective
Commitment Percentages from and against any and all claims, damages, losses,
liabilities, costs or expenses of any kind or nature whatsoever (including,
without limitation, fees and disbursements of counsel) which may be imposed on,
incurred by, or asserted against the Agent in any way relating to or arising out
of this Agreement or the transactions contemplated hereby or any action taken or
omitted by the Agent under this Agreement; provided, however, that no Bank shall
be liable for any portion of such claims, damages, losses, liabilities, costs or
expenses resulting from the Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each Bank agrees to reimburse the Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including, but not limited to, reasonable fees and expenses of counsel)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, to the extent that
the Agent is not reimbursed for such expenses by the Company, but without
limiting the obligation of the Company to make such reimbursement; provided,
however, that no Bank shall be liable for any portion of such expenses incurred
as a result of the Agent's gross negligence or willful misconduct. Each Bank
agrees to reimburse the Agent promptly upon demand for its ratable share of any
amounts owing to the Agent by the Banks pursuant to this Section; provided that
no Bank shall be responsible for failure of any other Bank to make such share
available to the Agent. If the indemnity furnished to the Agent under this
Section shall, in the reasonable judgment of the Agent, be insufficient or
become impaired, the Agent may call for additional indemnity from the Banks
(other than for the Agent's gross negligence or willful misconduct) and cease,
or not commence, to take any action until such additional indemnity is
furnished.
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10.9 Resignation of Agent. The Agent may resign as such at any time
upon thirty days' prior written notice to the Company and the Banks. In the
event of any such resignation, the Required Banks shall, by an instrument in
writing delivered to the Company and the Agent, appoint a successor, which shall
be (a) a Bank or (b) a commercial bank organized under the laws of the United
States or any State thereof and having a combined capital and surplus of at
least $500,000,000. If a successor is not so appointed or does not accept such
appointment before the Agent'sEresignation becomes effective, the resigning
Agent may appoint a temporary successor to act until such appointment by the
Required Banks is made and accepted or if no such temporary successor is
appointed as provided above by the resigning Agent, the Required Banks shall
thereafter perform all the duties of the Agent hereunder until such appointment
by the Required Banks is made and accepted. Any successor to the Agent shall
execute and deliver to the Company and the Banks an instrument accepting such
appointment and thereupon such successor Agent, without further act, deed,
conveyance or transfer shall become vested with all of the properties, rights,
interests, powers, authorities and obligations of its predecessor hereunder with
like effect as if originally named as Agent hereunder. Upon request of such
successor Agent, the Company and the resigning Agent shall execute and deliver
such instruments of conveyance, assignment and further assurance and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in such successor Agent all such properties, rights, interests,
powers, authorities and obligations. The provisions of this Article X shall
thereafter remain effective for such resigning Agent with respect to any
actions taken or omitted to be taken by such Agent while acting as the Agent
hereunder.
10.10 Sharing of Payments. The Banks agree among themselves that, in the
event that any Bank shall obtain payment in respect of any Loan or Letter of
Credit reimbursement obligation owing to such Bank under this Agreement through
the exercise of a right of set-off, banker's lien, counterclaim or otherwise in
excess of its ratable share as provided for in this Agreement, such Bank shall
promptly purchase from the other Banks participations in such Loans and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all of the Banks share such payment in
accordance with their respective ratable shares as provided for in this
Agreement. The Banks further agree among themselves that if payment to a Bank
obtained by such Bank through the exercise of a right of set-off, banker's lien,
counterclaim or otherwise as aforesaid shall be rescinded or must otherwise be
restored, each Bank which shall have shared the benefit of such payment shall,
by repurchase of participations theretofore sold, return its share of that
benefit to each Bank whose payment shall have been rescinded or otherwise
restored, together with interest thereon at the per annum rate, if any, at which
such Bank whose payment shall have been restored is liable with respect to such
restored payment. The Company agrees that any Bank so purchasing such
a participation may, to the fullest extent permitted by law, exercise all
rights of payment, including set-off, banker's lien or counterclaim, with
respect to such participation as fully as if such Bank were a holder of such
Loan or other obligation in the amount of such participation. The Banks further
agree among themselves that, in the event that amounts received by the Banks
and the Agent hereunder are insufficient to pay all such obligations when due,
the fees and other amounts owing to the Agent in such capacity shall be paid
therefrom before payment of obligations owing to the Banks under this
Agreement. Except as otherwise expressly provided in this Agreement, if any
Bank or the Agent shall fail to remit to the Agent or any other Bank an amount
payable by such Bank or the Agent to the Agent or such other Bank pursuant to
this Agreement on the date when such amount is due, such payments shall be made
together with interest thereon for each date from the date such amount is due
until the date such amount is paid to the Agent or such other Bank at a rate
per annum equal to the rate at which borrowings are available to the payee in
its overnight federal funds market.
10.11 Withholding Tax Exemption. Each Bank that is not organized and
incorporated under the laws of the United States or any State thereof agrees to
file with the Agent and the Company, in duplicate, (a) on or before the later of
(i) the Closing Date and (ii) the date such Bank becomes a Bank under this
Agreement and (b) thereafter, for each taxable year of such Bank (in the case of
a Form 4224) or for each third taxable year of such Bank (in the case of any
other form) during which interest or fees arising under this
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Agreement and the Notes are received, unless not legally able to do so
as a result of a change in United States income tax law enacted, or treaty
promulgated, after the date specified in the preceding clause (a), on or prior
to the immediately following due date of any payment by the Company hereunder,
a properly completed and executed copy of either Internal Revenue Service Form
4224 or Internal Revenue Service Form 1001 and Internal Revenue Service Form
W-8 or Internal Revenue Service Form W-9 and any additional form necessary for
claiming complete exemption from United States withholding taxes (or such other
form as is required to claim complete exemption from United States withholding
taxes), if and as provided by the Code or other pronouncements of the United
States Internal Revenue Service, and such Bank warrants to the Company that the
form so filed will be true and complete; provided that such Bank's failure to
complete and execute such Form 4224 or Form 1001, or Form W-8 or Form W-9, as
the case may be, and any such additional form (or any successor form or forms)
shall not relieve the Company of any of its obligations under this Agreement,
except as otherwise provided in this Section 10.11
10.12 The Co-Agents. Each Co-Agent, in such capacity, shall have no
authority, duties, responsibilities, obligations, liabilities or functions under
this Agreement or the Notes.
ARTICLE XI.
MISCELLANEOUS
11.1 Amendments, Etc.
(a) No amendment, modification, termination or waiver of any
provision of this Agreement nor any consent to any departure therefrom shall be
effective unless the same shall be in writing and signed by the Company (except
with respect to waivers by the Required Banks or all the Banks) and the Required
Banks and, to the extent any rights or duties of the Agent may be affected
thereby, the Agent, provided, however, that no such amendment, modification,
termination, waiver or consent shall, without the consent of the Agent and all
of the Banks, (i) subject to Section 3.10, authorize or permit the extension of
time for, or any reduction of the amount of, any payment of the principal of, or
interest (including the Applicable Margin) on, any Loan, or any fees or other
amount payable hereunder, or (ii) except as expressly authorized hereunder,
amend, extend or terminate the respective Commitment of any Bank, or (iii)
modify the provisions of this Section regarding the taking of any action under
this Section, or the definition of Required Banks, or (iv) modify the several
nature of the obligations of the Banks hereunder, modify the sharing provisions
among the Banks in Section 10.10, modify the first sentence of SectionE11.6 or
modify any other provision of this Agreement which by its terms requires the
consent of all the Banks.
(b) Any such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
(c) Notwithstanding anything herein to the contrary, no Bank that
is in default of any of its obligations, covenants or agreements under this
Agreement shall be entitled to vote (whether to consent or to withhold its
consent) with respect to any amendment, modification, termination or waiver of
any provision of this Agreement or any departure therefrom or any direction from
the Banks to the Agent, and, for purposes of determining the Required Banks at
any time when any Banks are in default under this Agreement, the Commitments and
Loans of such defaulting Banks shall be disregarded; provided that no action of
a type described in the proviso in Section 11.1(a) shall be binding on a
defaulting Bank without its written consent thereto.
11.2 Notices.
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(a) Except as otherwise provided in subsection 11.2(c) hereof,
all notices and other communications to or upon the parties hereto shall be
deemed to have been duly given or served if sent in writing (including
telecommunications) to the party to which such notice or other communication is
required or permitted to be given or served under this Agreement, to the address
or telex or telecopy number set forth below the name of such party on the
signature pages hereof, or at such other address or telex or telecopy number as
the parties hereto may hereafter specify to the others in writing. If for
purposes of receiving Invitations for Bid-Option Quotes and information
regarding Notices of Bid-Option Rate Borrowings, a Bank wishes to receive such
communications at an address or telex or telecopy number different from its
address or telex or telecopy number for other purposes under this Agreement, the
Agent shall communicate with such Bank for such purposes at such
different address, telex or telecopy number following the Agent's receipt of a
written notice from such Bank requesting that the Agent do so. All mailed
notices or other communications shall be by registered or certified mail,
postage prepaid, with return receipt requested. All notices or other
communications sent by means of telecopy, telex or other wire transmission
shall be made with request for assurance of receipt in a manner typical with
respect to communications of that type. Written notices or other
communications shall be deemed delivered upon receipt if delivered by hand, 3
Business Days after mailing if mailed, or 1 Business Day after deposit with an
overnight courier service if delivered by overnight courier. Notices or other
communications provided by any of the other means referred to above shall be
deemed delivered upon receipt. Notwithstanding the foregoing, all notices to
the Agent shall be effective only when actually received by the Agent, and all
notices from the Agent to any Bank regarding such Bank's obligation to fund
Loans or to make payment under Section 3.3(d) shall be effective only when
actually received by such Bank.
(b) Notices by the Company to the Agent with respect to
terminations or reductions of the Commitments pursuant to SectionE3.8, requests
for Loans and Letter of Credit Issuances pursuant to SectionE3.2, 3.3 or 3.4,
and notices of prepayment pursuant to Section 4.2 shall be irrevocable and
binding on the Company.
(c) Any notice to be given by the Agent or any Bank to the Agent
or any Bank hereunder, may be given by telephone, and shall be promptly
confirmed in writing upon the request of the recipient. Any such notice so
given by telephone shall be deemed effective upon receipt thereof by the party
to whom such notice is to be given.
11.3 No Waiver By Conduct; Remedies Cumulative. No course of dealing
on the part of the Agent or any Bank, nor any delay or failure on the part of
the Agent or any Bank in exercising any right, power or privilege hereunder or
under any Note shall operate as a waiver of such right, power or privilege or
otherwise prejudice the Agent's or such Bank's rights and remedies hereunder;
nor shall any single or partial exercise thereof preclude any further exercise
thereof or the exercise of any other right, power or privilege. No right or
remedy conferred upon or reserved to the Agent or any Bank under this Agreement,
or any Note, is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right or
remedy granted hereunder or thereunder or now or hereafter existing under any
applicable law. Every right and remedy granted by this Agreement or by
applicable law to the Agent or any Bank may be exercised from time to time and
as often as may be deemed expedient by the Agent or any Bank and, unless
contrary to the express provisions of this Agreement, or the Notes, irrespective
of the occurrence or continuance of any Default.
11.4 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, including, without limitation, under Sections 5.3, 5.5
and 11.5, representations and warranties of the Company made herein or in any
certificate, report, financial statement or other document furnished by or on
behalf of the Company pursuant to this Agreement shall be deemed to be material
and to have been relied upon by the Banks, notwithstanding any investigation
heretofore or hereafter made by any Bank or on such Bank's behalf, and shall
survive the repayment in full of the Loans and the termination of the
Commitments.
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11.5 Expenses and Indemnification.
(a) The Company shall pay, or reimburse the Agent or any Bank, as
the case may be, for (i) all reasonable out-of-pocket expenses of the Agent,
including reasonable fees and disbursements of special counsel for the Agent, in
connection with the preparation of this Agreement, any waiver or consent
hereunder or any amendment hereof or any Default, (ii) all reasonable costs and
expenses of the Agent or such Bank, including reasonable fees and disbursements
of counsel, in connection with any action or proceeding relating to a court
order, injunction or other process or decree restraining or seeking to restrain
the Agent from paying any amount under, or otherwise relating in any way to, any
Letter of Credit and any and all costs and expenses which it may incur relative
to any payment under any Letter of Credit, provided, that the Company shall not
be liable under this clause (ii) to the extent, but only to the extent, any such
costs and expenses of the Agent or any Bank are caused by the Agent's or such
Bank's breach of this Agreement or gross negligence, and (iii) if an Event of
Default occurs, all reasonable expenses incurred by the Agent or such Bank,
including reasonable fees and disbursements of counsel (including in-house
counsel), in connection with such Event of Default and collection and other
enforcement proceedings resulting therefrom. The Company shall indemnify each
Bank against any transfer taxes, documentary taxes, assessments or charges made
by any governmental authority by reason of the execution and delivery of this
Agreement or the Notes.
(b) The Company shall indemnify each Bank and the Agent, and
their respective officers, directors, employees and agents, and hold each Bank
and the Agent, and their respective officers, directors, employees and agents,
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind (including, without limitation, the reasonable fees and
disbursements of counsel for any Bank or the Agent or any such Person in
connection with any investigative, administrative or judicial proceeding,
whether or not such Bank, the Agent or any such Person, as the case may be,
shall be designated a party thereto) which may be incurred by any Bank, by the
Agent or by any such Person, substantially relating to or arising out of any
actual or proposed use of proceeds of Loans or Letters of Credit for the purpose
of acquiring assets or capital stock of any other Person; provided that none of
the Agent, any Bank or any such Person shall have the right to be indemnified
hereunder for its own gross negligence or willful misconduct as determined by a
court of competent jurisdiction.
(c) The Company hereby further indemnifies and agrees to hold the
Banks and the Agent, and their respective officers, directors, employees and
agents harmless from and against any and all claims, damages, losses,
liabilities, costs and expenses of any kind or nature whatsoever which the Banks
or the Agent or any such Person may incur or which may be claimed against any of
them by reason of or in connection with any Letter of Credit, and neither any
Bank nor the Agent or any of their respective officers, directors, employees or
agents shall be liable or responsible for: (i) the use which may be made of any
Letter of Credit or for any acts or omissions of any beneficiary in connection
therewith; (ii) the validity, sufficiency or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, insufficient, fraudulent or forged; (iii) payment by
the Agent to the beneficiary under any Letter of Credit against presentation of
documents which do not comply with the terms of any Letter of Credit, including
failure of any documents to bear any reference or adequate reference to such
Letter of Credit; (iv) any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit; or (v) any other event or
circumstance whatsoever arising in connection with any Letter of Credit;
provided, however, that the Company shall not be liable hereunder to the Banks
and the Agent and such other Persons and the Agent shall be liable to the
Company to the extent, but only to the extent, of any direct, as opposed to
consequential or incidental, damages suffered by the Company which were caused
by (A) the Agent'sEwrongful dishonor of any Letter of Credit after the
presentation to it by the beneficiary thereunder of a draft or other demand for
payment and other documentation strictly complying with the terms and
conditions of such Letter of Credit, or
MASCOTECH, INC. CREDIT AGREEMENT
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(B) the Agent's payment under any Letter of Credit to the extent, but
only to the extent, that such payment constitutes gross negligence or willful
misconduct of the Agent. The inclusion of any event in clauses (i) - (vii) of
Section 3.3(f) shall not by itself preclude a finding that such event
constitutes gross negligence or willful misconduct of the Agent. It is
understood that in making any payment under a Letter of Credit the Agent will
rely on documents presented to it under such Letter of Credit as to any and all
matters set forth therein without further investigation and regardless of any
notice or information to the contrary, and such reliance and payment against
documents presented under a Letter of Credit substantially complying with the
terms thereof shall not be deemed gross negligence or willful misconduct of the
Agent in connection with the payment.
11.6 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, provided that
the Company may not, without the prior written consent of all the Banks, assign
its rights or obligations hereunder or under the Notes, and the Banks shall not
be obligated to make any Loan hereunder to any Person other than the Company,
and the Agent shall not be obligated to issue any Letter of Credit for the
account of any Person other than the Company or any Consolidated Subsidiary of
the Company.
(b) The Agent from time to time in its sole discretion may appoint
agents for the purpose of servicing and administering this Agreement and the
transactions contemplated hereby and enforcing or exercising any rights or
remedies of the Agent provided under this Agreement, the Notes or otherwise. In
furtherance of such agency, the Agent may from time to time direct that the
Company provide notices, reports and other documents contemplated by this
Agreement (or duplicates thereof) to such agent. The Company hereby consents to
the appointment of such agent and agrees to provide all such notices, reports
and other documents and to otherwise deal with such agent acting on behalf of
the Agent in the same manner as would be required if dealing with the Agent
itself.
(c) Any Bank may sell a participation interest to any financial
institution(s), and such financial institution(s) may further sell a
participation interest (undivided or divided) to any financial institution(s),
in its Commitment and the Loans and risk of the Letters of Credit and such
Bank's or such participating financial institution's, as the case may be, rights
and benefits under this Agreement and the Notes, and to the extent of that
participation, such participant or participants shall have the same rights and
benefits against the Company under Section 9.3 as it or they would have had if
such participant or participants were the Bank making the Loans to the Company
hereunder, provided, however, that in purchasing such participation interest(s)
each such participant shall be deemed to have agreed to share with the Banks the
proceeds thereof as provided in Section 10.10 as fully as if such participant
were a Bank hereunder; and provided further, however, that (i) the obligations
under this Agreement of each Bank selling a participation interest hereunder
shall remain unmodified and fully effective and enforceable against such Bank,
(ii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Bank shall remain
the holder of its Notes for all purposes of this Agreement, (iv) the Company,
the Agent and the other Banks shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under this
Agreement, and (v) such Bank shall not grant to its participant(s) any rights
to consent or withhold consent to any action taken by such Bank or the Agent
under this Agreement other than action requiring the consent of all of the
Banks hereunder. Each Bank shall give the Company prior written notice of each
sale by such Bank of a participation interest under this Section 11.6(c). Each
participant shall be entitled to the benefits of Sections 5.3 and 5.5 with
respect to its participation interest as if it were a Bank; provided that no
participant shall be entitled to receive any greater amount pursuant to such
Sections 5.3 and 5.5 than the Bank that originally sold such participation
interest would have been entitled to receive in respect of such participation
interest had no such sale taken place.
MASCOTECH, INC. CREDIT AGREEMENT
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(d) Any Bank may, with the prior written consent of the Company
and the Agent (which consent in each case will not unreasonably be withheld, and
which consent in the case of the Company may not be withheld if there is any
Event of Default under Section 9.1(a), (f) or (g)) assign to one or more banks
or other financial institutions all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment, the Syndicated Loans owing to it, its share of the risk of Letters
of Credit, and the Syndicated Notes held by it); provided, however, that (i)
each such assignment shall be of a uniform, and not a varying, percentage of all
rights and obligations (other than any Bid-Option Loan or Bid-Option Note), (ii)
the amount of the Commitment of any assignee Bank as of any date, after giving
effect to each assignment to such assignee that is effective on such date, shall
in no event be less than $10,000,000, (iii) except in the case of an assignment
of all of a Bank's rights and obligations under this Agreement, (A) the amount
of the Commitment of the assigning Bank being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to each such assignment) shall in no event be less than $5,000,000 or an
integral multiple of $5,000,000, or such lesser amount as the Company and the
Agent may consent to and (B) after giving effect to each such assignment, the
amount of the Commitment of the assigning Bank shall in no event be less than
$10,000,000, (iv) the parties to each such assignment shall execute and deliver
to the Agent, for its acceptance and recording in the Register (as hereinafter
defined), an Assignment and Acceptance in the form of ExhibitEK hereto (an
"Assignment and Acceptance"), together with the Notes subject to such assignment
and a processing and recordation fee of $3,000, and (v) any Bank may without the
consent of the Company or the Agent, and without paying any fee, assign to any
Affiliate of such Bank that is a bank or financial institution all of its rights
and obligations under this Agreement. Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in such Assignment
and Acceptance, (i) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, have the rights and obligations of a Bank
hereunder and (ii) the Bank assignor thereunder shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all of
the remaining portion of an assigning Bank's rights and obligations under this
Agreement, such Bank shall cease to be a party hereto).
(e) By executing and delivering an Assignment and Acceptance, (i)
the Bank assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (A) other than as
provided in such Assignment and Acceptance, such assigning Bank makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any instrument or other document furnished pursuant hereto or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any instrument or other document furnished pursuant hereto;
and (B) such assigning Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or the
performance or observance by the Company of any of its obligations under this
Agreement or any instrument or other document furnished pursuant hereto, and
(ii) the assignee thereunder confirms to the assignor thereunder and the other
parties hereto as follows: (A) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 6.6 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (B) such assignee will, independently and
without reliance upon the Agent, such assigning Bank or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (C) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement as are delegated to the Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto; and (D) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Bank and agrees that shall be bound by all the terms and provisions of
this Agreement.
MASCOTECH, INC. CREDIT AGREEMENT
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(f) The Agent shall maintain a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation of
the names and addresses of the Banks and the Commitment of, and principal amount
of the Loans owing to, each Bank from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes, absent
demonstrable error, and the Company, the Agent and the Banks may treat each
Person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Company or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(g) Upon its receipt of an Assignment and Acceptance executed by
an assigning Bank and an assignee and, unless such assignment is of only a
portion of such assigning Bank's rights and obligations hereunder, the Notes
subject to such assignment, the Agent shall, if such Assignment and Acceptance
has been completed and the Agent and the Company have given their written
consent under Section 11.6(d) (if required), (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Company. Within five Business Days
after its receipt of such notice, the Company, at its own expense, shall execute
and deliver to the Agent (in exchange for the surrendered Notes unless such
assignment is of only a portion of such assigning Bank's rights and obligations
hereunder) a new Syndicated Note to the order of such assignee and a new
Bid-Option Note to the order of such assignee. Such new Syndicated Note and
Bid-Option Note shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of Exhibits A and B
hereto, respectively.
(h) If any Reference Bank makes an assignment of all of its
Commitment and Syndicated Loans to an unaffiliated institution pursuant to
subsection (d) above, or if the Fixed Rate Loans of any Reference Bank are
repaid pursuant to Section 5.2 or 5.3, the Agent shall, with the consent of the
Required Banks and the Company, appoint another Bank to act as
Reference Bank hereunder. No assignee of any Bank shall be entitled to receive
any greater payment under SectionE5.3 than such Bank would have been entitled
to receive with respect to the rights assigned or otherwise transferred, unless
such assignment is made by reason of the provisions of Section 5.2 or 5.3
requiring such Bank to designate a different lending office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
(i) Each Bank may assign to one or more banks or other financial
institutions any Bid-Option Note held by it. Any such Bank assigning a
Bid-Option Note shall for all purposes of this Agreement be deemed to be the
holder of such Note, and no assignee under this Section 11.6(i) shall as a
result of such assignment become a "Bank" under this Agreement.
(j) Notwithstanding any other provision set forth in this
Agreement, any Bank may at any time create a security interest in, or assign,
all or any portion of its rights under this Agreement (including, without
limitation, the Loans owing to it and the Note or Notes held by it) in favor of
any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System; provided that such creation of a
security interest or assignment shall not release such Bank from its obligations
under this Agreement.
11.7 Confidentiality. Each Bank agrees that all documentation and
other information made available by the Company to such Bank under the terms of
this Agreement shall (except (a) to the extent required by legal or governmental
process or otherwise by law, or (b) if such documentation and other information
is publicly available or hereafter becomes publicly available other than by
action of such Bank, or was theretofore known to such Bank independent of any
disclosure thereto by the Company, or (c) to the extent of necessary disclosure
to such Bank's accountants, attorneys or regulators, or (d) in any litigation or
similar proceedings related to this Agreement, the Notes or any Letter of
Credit) be held in the strictest
MASCOTECH, INC. CREDIT AGREEMENT
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confidence by such Bank and disclosed only to those officers, employees
and agents of such Bank or of any Affiliate of such Bank involved in the
administration of the credit from time to time outstanding from such Bank to
the Company or otherwise involved in servicing, maintaining or further
developing the relationship between such Bank and the Company, each of which
officers, employees and agents shall, except as permitted under this Section
11.7 generally with respect to such Bank, hold such documentation and other
information in the strictest confidence and to be used only in connection with
this Agreement; provided that (i) such Bank may disclose such documentation and
other information, and all other information that has been delivered to such
Bank by or on behalf of the Company prior to the Closing Date in connection
with such Bank's credit evaluation of the Company and its Subsidiaries, to any
other financial institution to which such Bank sells or proposes to sell a
participation or other interest in any of its Loans hereunder (or under any
other credit agreement with the Company), if such other financial institution,
prior to such disclosure, agrees for the benefit of the Company to comply with
the provisions of this Section 11.7 (including the provisions of this Section
11.7 allowing further disclosure to other financial institutions to whom a sale
of a participation or other interest is proposed), or to any Federal Reserve
Bank and (ii) such Bank may disclose the provisions of this Agreement and the
Notes and the amounts, maturities and interest rates of its Loans and the
amounts of Letters of Credit (and similar information relating to any other
credit agreement with the Company) to any purchaser or potential purchaser of
any interest of such Bank in any Loan to the Company.
11.8 Counterparts; Effectiveness of Telecopied Signatures. This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such counterpart. Delivery of
a telecopied signature on this Agreement shall be as effective against the
signer as delivery of its original signature.
11.9 Table of Contents and Headings. The table of contents and the
headings of the various subdivisions hereof are for the convenience of reference
only and shall in no way modify any of the terms or provisions hereof.
11.10 Construction of Certain Provisions. If any provision of this
Agreement refers to any action to be taken by any Person, or which such Person
is prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such Person, whether or not expressly
specified in such provision.
11.11 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenant, the fact that it would be permitted by an exception to, or
would be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or any event or condition which with notice or lapse
of time, or both, could become such a Default if such action is taken or such
condition exists.
11.12 Interest Rate Limitation. Notwithstanding any provisions of this
Agreement or the Notes, in no event shall the amount of interest paid or agreed
to be paid by the Company exceed an amount computed at the highest rate of
interest permissible under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Agreement or the Notes at the
time performance of such provision shall be due, shall involve exceeding the
interest rate limitation validly prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then, ipso facto, the obligations to be
fulfilled shall be reduced to an amount computed at the highest rate of interest
permissible under applicable law, and if for any reason whatsoever any Bank
shall ever receive as interest an amount which would be deemed unlawful under
such applicable law such interest shall be automatically applied to the payment
of principal of the Loans outstanding hereunder (whether or not then due and
payable) and not to the payment of interest, or shall be refunded to the Company
if such principal and all other obligations of the Company to the Banks have
been paid in full.
MASCOTECH, INC. CREDIT AGREEMENT
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11.13 Substitution of Banks.
(a) Upon five Business Days' written notice in the form of
Exhibit L delivered to the Agent and the applicable Bank, the Company may
replace any one or more of the Banks. Upon the date of its effectiveness, such
notice shall terminate the Commitment of such Bank entirely, provided that the
Company shall prepay each Loan of such Bank (if any) in full on the effective
date of such termination, together with accrued interest thereon, all amounts
due pursuant to Sections 5.3 and 5.5, all accrued facility fees with respect to
such Bank and all other amounts owing to such Bank hereunder to such effective
date.
(b) If the Company shall terminate the Commitment of any Bank
pursuant to the provisions of subsection (a) of this Section 11.13, the Company
shall designate another bank or other banks (which may be one of the Banks) (in
either case, an "Additional Bank") to be parties to this Agreement,
provided, that (i) without the consent of the Agent, the total number of
Additional Banks (other than those that were already Banks) may not exceed the
total number of Banks whose Commitments are terminated pursuant to Section
11.13(a) plus three, (ii) the amount of the Commitment of any Additional Bank
may not be less than $10,000,000, (iii) the amount of the Commitment(s) of the
Additional Bank(s) (or, if any such Additional Bank already is a Bank, the added
portion of such Bank's Commitment) shall in the aggregate equal the amount of
the Commitment so terminated and (iv) the Company or the Additional Bank, and
not the Bank being terminated pursuant to subsection (a) of this Section 11.13,
shall pay the processing and recordation fee required under Section 11.6(d)(iv).
Any Additional Bank shall become a party to this Agreement and be considered a
Bank hereunder for all purposes if (i) it shall agree in writing to be bound by
all of the terms and provisions of this Agreement, such agreement to specify the
amount of the Commitment of such Additional Bank and to be otherwise in form and
substance satisfactory to the Agent, (ii) it shall make Syndicated Loans to the
Company in principal amounts which bear the same ratio to the amounts of the
Syndicated Loans of other Banks (including other Additional Banks) then
outstanding or to be concurrently outstanding as the amount of the Commitment of
such Additional Bank bears to the then aggregate amount of the Commitments of
such other Banks (including other Additional Banks), and (iii) a copy of such
agreement and of evidence satisfactory to the Agent of the making of such Loans
shall be furnished to the Agent.
11.14 Collateral. Each of the Banks represents to the Agent and each of
the other Banks that it, in good faith, is not relying upon any "margin
stock"(as defined in Regulation U) as collateral in the extension or maintenance
of the credit provided for in this Agreement.
11.15 Governing Law. This Agreement is a contract made under, and shall
be governed by and construed in accordance with, the law of the State of
Michigan applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
11.16 Integration and Severability. This Agreement and the Notes embody
the entire agreement and understanding among the Company, the Agent, and the
Banks, and supersede all prior agreements and understandings, relating to the
subject matter hereof and thereof. In case any one or more of the obligations
of the Company under this Agreement or any Note shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining obligations of the Company shall not in any way be affected or
impaired thereby, and such invalidity, illegality or unenforceability in one
jurisdiction shall not affect the validity, legality or enforceability of the
obligations of the Company under this Agreement or any Note in any other
jurisdiction.
11.17 WAIVER OF JURY TRIAL. THE BANKS, THE AGENT, THE CO-AGENTS AND THE
COMPANY, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM
MASCOTECH, INC. CREDIT AGREEMENT
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MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THEM RELATED HERETO
OR THERETO. NONE OF THE BANKS, THE AGENT, THE CO-AGENTS OR THE COMPANY SHALL
SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A
JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
Closing Date, notwithstanding the date and year first above written.
"COMPANY":
MASCOTECH, INC.
By: /s/ Timothy Wadhams
-------------------------------
Timothy Wadhams
Its: Vice President-
Controller and Treasurer
21001 Van Born Road
Taylor, Michigan 48180
Attention: Timothy Wadhams
Fax: (313) 374-6118
"AGENT":
NBD BANK
By: /s/ Richard H. Huttenlocher.
----------------------------
Richard H. Huttenlocher.
Its: First Vice President
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Michigan Banking Division
Telex: 230729
Fax: (313) 225-2290
MASCOTECH, INC. CREDIT AGREEMENT
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"CO-AGENTS":
COMERICA BANK
By: /s/
-------------------------------
Its: Account Officer
THE BANK OF NEW YORK
By: /s/
-------------------------------
Its:
---------------------------
NATIONSBANK, N.A.
By: /s/
-------------------------------
Its: Vice President
BANK OF AMERICA ILLINOIS
By: /s/ Steve Ahrenholz
-------------------------------
Steve Ahrenholz
Its: Vice President
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 68
"COMMITMENT": "BANKS":
$97,500,000 NBD BANK
By: /s/ Richard H. Huttenlocher
-------------------------------
Richard H. Huttenlocher
Its: First Vice President
Domestic and Eurodollar
Lending Offices
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Michigan Banking Division
Telex: 230729
Fax: (313) 225-2290
MASCOTECH, INC. CREDIT AGREEMENT
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$70,000,000 COMERICA BANK
By: /s/
-------------------------------
Its: Account Officer
Domestic and Eurodollar
Lending Office:
500 Woodward Avenue
Detroit, Michigan 48226
Attention:
--------------------------
Telex: 170363
Fax: (313) 222-9514
MASCOTECH, INC. CREDIT AGREEMENT
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$55,000,000 THE BANK OF NEW YORK
By: /s/
-------------------------------
Its: Vice President
Domestic and Eurodollar
Lending Office:
One Wall Street
New York, New York 10286
Attention: Susan Baratta
-------------------------
Telex: TRT177363
Fax: (212) 635-6434
MASCOTECH, INC. CREDIT AGREEMENT
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$45,000,000 NATIONSBANK, N.A.
By: /s/
-------------------------------
Its: Vice President
Domestic and Eurodollar
Lending Office:
NationsBank Plaza
NC1-002-17-21
Charlotte, North Carolina 28255
Attention: Renita Hines
-------------------------
Fax: (704) 386-8694
MASCOTECH, INC. CREDIT AGREEMENT
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$45,000,000 BANK OF AMERICA ILLINOIS
By: /s/ Steve K. Ahrenholz
------------------------------
Steve K. Ahrenholz
Its: Vice President
Domestic and Eurodollar
Lending Office:
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Zack Zarr
Fax: (312) 974-9626
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 73
$40,000,000 PNC BANK, NATIONAL ASSOCIATION
By: /s/
-------------------------------
Its: Assistant Vice President
Notices:
500 West Madison Street
Suite 3140
Chicago, Illinois 60606
Fax: (312) 906-3420
Domestic and Eurodollar
Lending Office:
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Attention:
---------------------------
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 74
$32,500,000 MICHIGAN NATIONAL BANK
By: /s/ Joseph M. Redoutey
-------------------------------
Joseph M. Redoutey
Its: Commercial Relationship
Manager
--------------------------
Domestic and Eurodollar
Lending Office:
27777 Inkster Road 10-36
Farmington Hills, MI 48333-9065
Attention: Joseph M. Redoutey
Fax: (810) 473-4345
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 75
$27,500,000 THE ROYAL BANK OF CANADA
By: /s/ Patrick K. Shields
----------------------------------
Patrick K. Shields
Its: Manager, Corporate Banking
-----------------------------
Domestic and Eurodollar
Lending Office:
Grand Cayman Branch
Royal Bank of Canada
One Financial Square 23rd Floor
New York, New York 10005-3531
Attention: Linda Smith
Fax: (212) 428-2372
MASCOTECH, INC. CREDIT AGREEMENT
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$25,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW
YORK
By: /s/
----------------------------------
Its: Vice President
-----------------------------
Domestic and Eurodollar
Lending Office:
60 Wall Street
New York, New York 10260-0060
Attention:
----------------------------
Telex: 177615 or 620106
Fax: (212) 648-5336
MASCOTECH, INC. CREDIT AGREEMENT
-70-
<PAGE> 77
$25,000,000 NATIONAL CITY BANK
By: /s/
----------------------------------
Its: Vice President
-----------------------------
Domestic and Eurodollar
Lending Office:
1900 E. Ninth Street
Cleveland, Ohio 44114
Attention:___________________________
Telex: 212537
Fax: (216) 575-9396
MASCOTECH, INC. CREDIT AGREEMENT
-71-
<PAGE> 78
$22,500,000 CIBC INC.
By: /s/
----------------------------------
Its: Director CIBC Wood Gundy
Securities Corp., As Agent
-----------------------------
Domestic and Eurodollar
Lending Office (Borrowing Notices):
Atlanta Agency
Two Paces Ferry West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Attention: Kelli Jones
Fax: (770) 319-4950
Other Notices:
425 Lexington Avenue
New York, New York 10017
Attention: Brian O'Callahan
Fax: (212) 885-4940
with a copy to:
Atlanta Agency
Two Paces Ferry West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Attention: Klu Auchter
Fax: (770) 319-4950
MASCOTECH, INC. CREDIT AGREEMENT
-72-
<PAGE> 79
$22,500,000 THE FUJI BANK, LTD.
By: /s/ Peter L. Chinniei
----------------------------------
Peter L. Chinniei
Its: Joint General Manager
-----------------------------
Domestic and Eurodollar
Lending Office:
225 W. Wacker Drive
Chicago, Illinois 60606
Attention: Cely Navarro
----------------------------
Telex: 253114
Fax: (312) 621-0539
MASCOTECH, INC. CREDIT AGREEMENT
-73-
<PAGE> 80
$17,500,000 KEYBANK, NATIONAL ASSOCIATION
By: /s/
----------------------------------
Its: Assistant Vice President
-----------------------------
Domestic and Eurodollar
Lending Office:
127 Public Square, N.E.
Cleveland, Ohio 44114
Attention: Thomas A. Crandell
----------------------------
Telex:
------
Fax: (216) 689-4981
MASCOTECH, INC. CREDIT AGREEMENT
-74-
<PAGE> 81
$17,500,000 CORESTATES BANK
By: /s/
----------------------------------
Its: Vice President
-----------------------------
Domestic and Eurodollar
Lending Office:
1345 Chestnut Street, P.O. Box 7618
Philadelphia, PA 19101-7618
Attention: Diane Cypher
----------------------------
Telex: 71-499-0118
-----------
Fax: (215) 973-6745
MASCOTECH, INC. CREDIT AGREEMENT
-75-
<PAGE> 82
$17,500,000 FLEET NATIONAL BANK
By: /s/
------------------------------
Robert J. Lord
Its: Vice President
Domestic and Eurodollar
Lending Office:
One Federal Street
Boston, MA 02211
Attention: Anahid Varjabedian
Telex:
------
Fax: (617) 346-0145
MASCOTECH, INC. CREDIT AGREEMENT
-76-
<PAGE> 83
$15,000,000 THE SANWA BANK, LIMITED, CHICAGO BRANCH
By: /s/ Kenneth C. Eichwald
---------------------------------
Kenneth C. Eichwald
Its: First Vice President and
Assistant General Manager
----------------------------
Domestic and Eurodollar
Lending Office:
10 South Wacker Drive, 31st Floor
Chicago, Illinois 60606
Attention: Richard H. Ault
Fax: (312) 346-6677
MASCOTECH, INC. CREDIT AGREEMENT
-77-
<PAGE> 84
EXHIBIT A
SYNDICATED NOTE
February 28, 1997
Detroit, Michigan
For value received, MASCOTECH, INC., a Delaware corporation (the
"Company"), promises to pay to the order of ___________________________________
(the "Bank"), the unpaid principal amount of each Syndicated Loan made by the
Bank to the Company pursuant to the Credit Agreement referred to below, on the
last day of the Interest Period relating to such Loan. The Company further
promises to pay interest on the aggregate unpaid principal amount of such
Syndicated Loans on the dates and at the rates provided for in the Credit
Agreement. All such payments of principal and interest shall be made in
Dollars in immediately available funds at the Agent's principal office in
Detroit, Michigan.
Presentment, demand for payment, notice of non-payment, protest and
further notice or demand of any kind in connection with this Syndicated Note
are hereby expressly waived by the Company and each endorser or guarantor
hereof.
This Syndicated Note evidences one or more Syndicated Loans made under the
Credit Agreement, dated as of February 28, 1997, as amended, supplemented or
otherwise modified from time to time (the "Credit Agreement"), by and among the
Company, the banks (including the Bank) party thereto, NBD Bank, as Agent, and
Comerica Bank, The Bank of New York, NationsBank, N.A. and Bank of America
Illinois, as Co-Agents, to which reference is hereby made for a statement of
the circumstances under which this Syndicated Note is subject to prepayment and
under which its due date may be accelerated. Capitalized terms used but not
defined in this Syndicated Note shall have the respective meanings ascribed
thereto in the Credit Agreement.
This Syndicated Note is made under, and shall be governed by and construed
in accordance with, the laws of the State of Michigan applicable to contracts
made and to be performed entirely within such State and without giving effect
to choice of law principles of such State.
MASCOTECH, INC.
By:______________________________
Its:___________________________
<PAGE> 85
EXHIBIT B
BID-OPTION NOTE
February 28, 1997
Detroit, Michigan
For value received, MASCOTECH, INC., a Delaware corporation (the
"Company"), promises to pay to the order of ___________________________________
(the "Bank"), the unpaid principal amount of each Bid-Option Loan made by the
Bank to the Company pursuant to the Credit Agreement referred to below, on the
last day of the Interest Period relating to such Loan. The Company further
promises to pay interest on the aggregate unpaid principal amount of such
Bid-Option Loans on the dates and at the rates provided for in the Credit
Agreement. All such payments of principal and interest with respect to Dollar
Bid-Option Loans shall be made in Dollars in immediately available funds at the
Agent's principal office in Detroit, Michigan. All such payments of principal
and interest with respect to Foreign Currency Bid-Option Loans shall be made in
the currencies in which such Loans are denominated and in funds immediately
available, freely transferrable and cleared at the office or branch of the Bank
from which such Loans were made.
Presentment, demand for payment, notice of non-payment, protest and
further notice or demand of any kind in connection with this Bid-Option Note
are hereby expressly waived by the Company and each endorser or guarantor
hereof.
This Bid-Option Note evidences one or more Bid-Option Loans made under the
Credit Agreement, dated as of February 28, 1997, as amended, supplemented or
otherwise modified from time to time (the "Credit Agreement"), by and among the
Company, the banks (including the Bank) party thereto, NBD Bank, as Agent, and
Comerica Bank, The Bank of New York, NationsBank, N.A. and Bank of America
Illinois, as Co-Agents, to which reference is hereby made for a statement of
the circumstances under which this Bid-Option Note is subject to prepayment and
under which its due date may be accelerated. Capitalized terms used but not
defined in this Bid-Option Note shall have the respective meanings ascribed
thereto in the Credit Agreement.
This Bid-Option Note is made under, and shall be governed by and construed
in accordance with, the laws of the State of Michigan applicable to contracts
made and to be performed entirely within such State and without giving effect
to choice of law principles of such State.
MASCOTECH, INC.
By:______________________________
Its:___________________________
<PAGE> 86
EXHIBIT C
NOTICE OF SYNDICATED BORROWING
[Date]
To each Bank party to the
referenced Credit Agreement
c/o NBD Bank,
as Agent for the Banks
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
MASCOTECH, INC., a Delaware corporation (the "Company"), hereby requests a
Syndicated Borrowing pursuant to Section 3.2 of the Credit Agreement, dated as
of February 28, 1997, as amended, supplemented or otherwise modified (the
"Credit Agreement"), by and among the Company, the Banks and Co-Agents party
thereto, and NBD Bank, as Agent. Capitalized terms used but not defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
The Syndicated Borrowing is to be made on _____________, 19__, in the
amount of $_______________. The Syndicated Loans comprising such Borrowing
shall be made as __________________________________ [insert either CD Rate,
Eurodollar Rate or Floating Rate] Loans. [The Interest Period shall be
___________________ [insert permitted Interest Period for a CD Rate Borrowing
or Eurodollar Rate Borrowing].] Such Syndicated Borrowing shall be evidenced
by the Company's Syndicated Notes.
MASCOTECH, INC.
By:__________________________________
Its:______________________________
<PAGE> 87
EXHIBIT D
REQUEST FOR LETTER OF CREDIT ISSUANCE
[Date]
To each Bank party to the
referenced Credit Agreement
c/o NBD Bank,
as Agent for the Banks
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
MASCOTECH, INC., a Delaware corporation (the "Company"), hereby requests a
Letter of Credit Issuance pursuant to Section 3.3 of the Credit Agreement,
dated as of February 28, 1997, as amended, supplemented or otherwise modified
(the "Credit Agreement"), by and among the Company, the Banks and Co-Agents
party thereto, and NBD Bank, as Agent. Capitalized terms used but not defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
The Letter of Credit is to be issued on ________________, 19__, shall be
for the account of ________*, shall be in the maximum amount of $_____________,
shall be to and for the benefit of __________________, shall have a stated
expiry date of _______________, 19__, and shall contain the further terms and
conditions set forth in the attached letter of credit application of the Agent.
MASCOTECH, INC.
By:______________________________
Its:__________________________
________________
* Specify the Company or identify a Consolidated Subsidiary.
<PAGE> 88
EXHIBIT E
BID-OPTION QUOTE REQUEST
[Date]
NBD Bank,
as Agent for the Banks
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
MASCOTECH, INC., a Delaware corporation (the "Company"), hereby requests
offers to make Bid-Option Loans comprising the Bid-Option Borrowing(s)
described below pursuant to Section 3.4(b) of the Credit Agreement, dated as of
February 28, 1997, as amended, supplemented or otherwise modified (the "Credit
Agreement"), by and among the Company, the Banks and Co-Agents party thereto,
and NBD Bank, as Agent. Capitalized terms used but not defined herein shall
have the respective meanings ascribed thereto in the Credit Agreement.
Date of Bid-Option Borrowing(s): ________, 19__
Type of Bid-Option Borrowing(s): [Dollar: ____________ [Absolute Rate]
[Eurodollar Rate] [Foreign Currency: _____ [desired currency]]
Aggregate Amount of each Bid-Option Borrowing: (a) _______________*
(b) _______________
(c) _______________
Interest Period: (a) ______________**
(b) ______________
(c) ______________
MASCOTECH, INC.
By:_______________________________________
Its:___________________________________
*Must be (a) $25,000,000 or a larger multiple of $5,000,000, in the case of
Dollar Bid-Option Borrowings, or (b) not less than the Dollar Equivalent of
$5,000,000, in the case of Foreign Currency Bid-Option Borrowings.
**Must comply with the definition of the term "Bid-Option Interest Period."
<PAGE> 89
EXHIBIT F
INVITATION FOR BID-OPTION QUOTES
[Date]
To: [Name of Bank]
Attention: ____________________
Reference is made to the Credit Agreement, dated as of February 28, 1997,
as amended, supplemented or otherwise modified (the "Credit Agreement"), by and
among MASCOTECH, INC., a Delaware corporation, the Banks and Co-Agents party
thereto, and NBD Bank, as Agent. Capitalized terms used but not defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
Pursuant to Section 3.4(c) of the Credit Agreement, NBD Bank, as Agent, is
pleased on behalf of the Company to invite you to submit Bid-Option Quotes to
the Company for the Bid-Option Borrowing(s) described below.
Date of Bid-Option Borrowing(s): ________, 19__
Type of Bid-Option Borrowing(s): [Dollar: __________ [Absolute Rate]
[Eurodollar Rate] [Foreign Currency: _____ [desired currency]]
Aggregate Amount of Each
Bid-Option Borrowing: Interest Period:
(a) ____________________ (a) ________________
(b) ____________________ (b) ________________
(c) ____________________ (c) ________________
Please respond to this invitation by no later than [9:00 a.m.]* [10:00
a.m.]** [2:00 p.m.]*** (Detroit time) on _________________, 19__. ****
NBD BANK, as Agent
By: ______________________________________
Its: _________________________________
* Absolute Rate Dollar Bid-Option Borrowings.
** Eurodollar Rate Dollar Bid-Option Borrowings.
*** Foreign Currency Bid-Option Borrowings.
**** The proposed date of Borrowing in the case of Absolute Rate Dollar
Bid-Option Borrowings. The fourth Business Day prior to the proposed date
of Borrowing in the case of Eurodollar Rate Dollar Bid-Option Loans. The
third Business Day prior to the proposed date of Borrowing in the case of
Foreign Currency Bid-Option Borrowings.
<PAGE> 90
EXHIBIT G
BID-OPTION QUOTE
[Date]
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Michigan Banking Division
Reference is made to the Credit Agreement, dated as of February 28, 1997,
as amended, supplemented or otherwise modified, by and among MASCOTECH, INC., a
Delaware corporation, the Banks and Co-Agents party thereto, and NBD Bank, as
Agent. Capitalized terms used but not defined herein shall have the respective
meanings ascribed thereto in such Agreement.
In response to your Invitation for Bid-Option Quotes dated _____, 19__,
_________________________ (the "Bank"), hereby makes the following offer[s] to
make [a] Bid-Option Loan[s]:
1. Quoting Bank: ____________________________
Contact Person: _________________________
2. Date of proposed Borrowing: __________, 19__(1)
3. Quotes:
Type of Bid-Option
Loans: Absolute Rate
Dollar, Eurodollar Bid-Option Absolute
Rate Dollar or Foreign Rate or Bid-Option
Currency (also specify Principal Eurodollar Rate Interest
the foreign currency)(2) Amount(3) Margin(4) Period(5)
----------------------- --------- ------------------- -----------
<PAGE> 91
(a) _______________________ _________ ___________________ ___________
(b) _______________________ _________ ___________________ ___________
(c) _______________________ _________ ___________________ ___________
4. The aggregate amount of Bid-Option Loans which may be accepted by the
Company pursuant to this Bid-Option Quote shall not exceed $_________.6
The Bank acknowledges and agrees that this Bid-Option Quote (a) is
irrevocable and (b) subject to the terms and conditions of the Credit
Agreement, obligates it to make a Bid-Option Loan for which any quote is
accepted, in whole or in part.
[Name of Bank]
By: ______________________________________
Its: _________________________________
(1). As specified in the related Invitation for Bid-Option Quotes.
(2). As specified in the related Invitation for Bid-Option Quotes.
(3). The Dollar Equivalent of the principal amount (a) must be (i) in the case
of Dollar Bid-Option Loans, $5,000,000 or a larger multiple thereof, or (2)
in the case of Foreign Currency Bid-Option Loans, not less than $1,000,000,
and (b) may not exceed the Dollar Equivalent of the aggregate amount of the
related Bid-Option Borrowing specified in the related Invitation for
Bid-Option Quotes.
(4). Specify rate of interest per annum (rounded up to the nearest 1/10,000th of
1%) or applicable margin, which may be positive or negative, expressed as a
percentage (rounded up to the nearest 1/10,000th of 1%), as the case may
be.
(5). As specified in the related Invitation for Bid-Option Quotes.
(6). Must be at least equal to the minimum amount specified in note 3 above.
<PAGE> 92
EXHIBIT H
NOTICE OF DISBURSEMENT OF
FOREIGN CURRENCY BID-OPTION LOAN
[Date]
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
Reference is made to the Credit Agreement, dated as of February 28,
1997, as amended, supplemented or otherwise modified (the "Credit Agreement"),
by and among MASCOTECH, INC., a Delaware corporation, the Banks and Co-Agents
party thereto, and NBD Bank, as Agent. Capitalized terms used but not defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
Pursuant to Section 3.5(c) of the Credit Agreement, ________________
hereby notifies you of its disbursement of a Foreign Currency Bid-Option Loan
on ______________, 19___. Such Loan is denominated in __________ [specify
currency] and is in the original principal amount of ___________.* The
Interest Period applicable to such Loan is _______________.
[Name of Bank]
By: ______________________________________
Its: _________________________________
* Specify amount in the currency in which the Loan is denominated.
<PAGE> 93
EXHIBIT I
NOTICE OF RECEIPT OF
FOREIGN CURRENCY BID-OPTION LOAN PAYMENT
[Date]
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
Reference is made to the Credit Agreement, dated as of February 28, 1997,
as amended, supplemented or otherwise modified (the "Credit Agreement"), by and
among MASCOTECH, INC., a Delaware corporation, the Banks and Co-Agents party
thereto, and NBD Bank, as Agent. Capitalized terms used but not defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
Pursuant to Section 4.4(a) of the Credit Agreement, _______________ hereby
notifies you of its receipt of payment in the amount of __________* of the
principal of the Foreign Currency Bid-Option Loan disbursed by it on
___________, 19__ in the original principal amount of __________*. After
application of such payment, the outstanding principal balance of such Loan is
_____________.
[Name of Bank]
By: ______________________________________
Its: _________________________________
* Specify amount in the currency in which the Loan is denominated.
<PAGE> 94
EXHIBIT K
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of February 28, 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among MASCOTECH, INC., the Banks and Co-Agents party thereto, and
NBD BANK, as agent for the Banks (in such capacity, the "Agent"). Capitalized
terms used but not defined herein shall have the respective meanings ascribed
thereto in the Credit Agreement.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns (without recourse) to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor's rights and obligations under the Credit
Agreement (other than the Bid-Option Loans and Bid-Option Notes) as of the
Effective Date (as hereinafter defined) equal to the percentage interest
specified on Schedule 1 of all of the Assignor's outstanding rights and
obligations under the Credit Agreement. After giving effect to such sale and
assignment, the Assignee's Commitment and the amount of the Syndicated Loans
owing to the Assignee will be as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit
Agreement or any instrument or other document furnished pursuant thereto or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any instrument or other document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the performance or observance by the Company of
any of its obligations under the Credit Agreement or any instrument or other
document furnished pursuant thereto; and (iv) [attaches the Syndicated Note
held by the Assignor and] requests that the Agent arrange for the Company to
issue a new Syndicated Note and a new Bid-Option Note payable to the order of
the Assignee.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 6.6 thereof and copies of the financial statements delivered pursuant
to Section 7.1 of the Credit Agreement and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, any Co-Agent, the Assignor
or any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (iii) appoints and authorizes the
Agent to take
<PAGE> 95
such action as agent on its behalf and to exercise such powers and discretion
and discretion under the Credit Agreement as are delegated to the Agent by the
terms thereof, together with such powers and discretion as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with thehe
terms of the Credit Agreement all of the obligations that are required to be it
performed by it as a Bank; and (v) if the Assignee is organized under the laws
of a jurisdiction outside of the United States, attaches the forms prescribedhe
by the Internal Revenue Service of the United States certifying as to theee's
Assignee's status for purposes of determining exemption from United Statesg
withholding taxes with respect to all payments to be made to the Assignee under
the Credit Agreement and the Notes and such other documents as are necessary to
indicate that all such payments are subject to such taxes at a rate reduced by
an applicable tax treaty.
4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Effective Date") shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1.
5. Upon consent hereto by the Company and the Agent and such acceptance
and recording by the Agent, as of the Effective Date, (i) the Assignee shall be
a party to the Credit Agreement and have the rights and obligations of a Bank
thereunder with a Commitment in the amount indicated for the Assignee on
Schedule 1 and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement
and the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest, commitment fees and facility
fees with respect thereto) to the Assignee. The Assignor and Assignee shall
make all appropriate adjustments in payments under the Credit Agreement and
the Syndicated Notes for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Michigan.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
Schedule 1 to this Assignment and Acceptance by telecopier shall be effective
as delivery of a manually executed counterpart of this Assignment and
Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1
to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.
<PAGE> 96
EXHIBIT L
NOTICE OF SUBSTITUTION OF BANKS
[Date]
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
[Terminated Bank]
___________________________
___________________________
Attention: ________________
Reference is made to the Credit Agreement, dated as of February 28, 1997,
as amended, supplemented or otherwise modified (the "Credit Agreement"), by and
among MASCOTECH, INC., a Delaware corporation, the Banks and Co-Agents party
thereto, and NBD Bank, as Agent. Capitalized terms used but not defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
Pursuant to Section 11.13(a) of the Credit Agreement, the Company hereby
terminates the Commitment of ___________________ (the "Terminated Bank")
effective _____________, 19__.* On such date, the Company shall prepay each
Loan of such Bank in full, together with accrued interest thereon, all amounts
due pursuant to Sections 5.3 and 5.5 of the Credit Agreement, all accrued
facility fees with respect to such Bank and all other amounts owing to such
Bank under the Credit Agreement to such date.
Pursuant to Section 11.13(b) of the Credit Agreement, the Company hereby
designates ______________ [and __________] to replace the Terminated Bank.
MASCOTECH, INC.
By: ______________________________________
Its: __________________________________
* Must be not less than five Business Days after notice.
<PAGE> 97
EXHIBIT M
February __, 1997
To the Banks, Co-Agents and Agent
party to the Credit Agreement described
herein, in care of
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of February 28, 1997
(the "Credit Agreement"), by and among MASCOTECH, INC., a Delaware corporation,
the banks (the "Banks") and the co-agents (the "Co-Agents") party thereto, and
NBD Bank, as agent (in such capacity, the "Agent") for the Banks. I am Vice
President and Corporate Counsel for the Company, and in the capacity of counsel
for the Company I have been requested by the Company to give my opinion pursuant
to Section 8.3(a) of the Credit Agreement. For purposes of this opinion, the
terms used in this opinion which are not defined herein shall have the
respective meanings set forth in the Credit Agreement.
I have examined the Credit Agreement and the Notes, the Convertible
Subordinated Debentures referred to in the definition of the term "Subordinated
Debt" in the Credit Agreement and the indenture governing the issuance of such
Convertible Subordinated Debentures (the "Subordinated Debt Documents"), and
certified copies of the Company's certificate of incorporation, by-laws and
board of directors' resolutions authorizing the Company's participation in the
transactions contemplated by the Credit Agreement. I have also examined copies
of all such documents and records of the Company and all such other documents
and records, and have made such investigations of law, as I have deemed
necessary and relevant as a basis for my opinion.
Based upon the foregoing, it is my opinion that:
(a) The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware and is duly authorized to
do business and is in good standing in the State of Michigan.
(b) The Company has all requisite corporate power and authority to conduct
its business substantially as now being conducted and to own its properties.
(c) The Company has full power, authority and legal right to execute and
deliver
<PAGE> 98
To the Banks, Co-Agents and Agent
February __, 1997
Page 2
the Credit Agreement and the Notes, to perform and observe the terms and
provisions thereof, and to borrow thereunder. The execution, delivery and
performance by the Company of its obligations under the Credit Agreement and the
Notes and the borrowings thereunder have been duly authorized by the proper
corporate proceedings and do not contravene any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Company or
any Subsidiary, or any order of any court, regulatory body or arbitral tribunal
or any judgment, order or decree, or, to my knowledge after due inquiry, any
agreement or instrument, binding on the Company or any Subsidiary, or, to my
knowledge after due inquiry, result in the creation of any lien, charge or
encumbrance upon any of their respective property or assets pursuant to any
agreement or instrument to which any of them is a party or binding upon any of
them.
(d) The Credit Agreement and the Notes constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms.
(e) There are, to my knowledge after due inquiry, no suits, proceedings or
actions at law or in equity or by or before any governmental commission, board,
bureau, or other administrative agency pending or threatened against or
affecting the Company or any Subsidiary, (i) in which there is a reasonable
possibility of an adverse decision which is likely to materially and adversely
affect the financial condition or business of the Company and its Subsidiaries,
taken as a whole, or (ii) which will in any manner affect the enforceability or
validity of the Credit Agreement or any Note.
(f) No approval, consent or authorization of or filing or registration with
any state or federal agency or regulatory authority is necessary for the
execution or delivery by the Company of the Credit Agreement or the issuance of
the Notes, for the validity or enforceability of the Credit Agreement or the
Notes, or for the performance by the Company of any of the terms or conditions
thereof or for any borrowing by the Company thereunder.
(g) The Notes represent Senior Indebtedness as that term is defined in the
Subordinated Debt Documents.
The opinion expressed in paragraph (d) above is subject to the
qualifications that the enforcement of the rights and remedies set forth in the
Credit Agreement and the Notes is subject to the effect of applicable
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally, and to general principles of equity, whether
applied in a proceeding at law or in equity.
<PAGE> 99
To the Banks, Co-Agents and Agent
February __, 1997
Page 3
Very truly yours,
David B. Liner
Vice President and Corporate Counsel
MascoTech, Inc.
<PAGE> 100
EXHIBIT N
February 28, 1997
To the Banks, Co-Agents and Agent
party to the Credit Agreement described
herein, in care of
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
RE: MASCOTECH, INC. CREDIT AGREEMENT
DATED AS OF FEBRUARY 28, 1997
Ladies and Gentlemen:
We have acted as special counsel for the Agent (as defined below) in
connection with the Credit Agreement, dated as of February 28, 1997 (the
"Credit Agreement"), by and among MascoTech, Inc. (the "Company"), the banks
(the "Banks") and co-agents (the "Co-Agents") party thereto, and NBD Bank, as
agent (in such capacity, the "Agent") for the Banks, providing, among other
things, for the extension to the Company of a bank credit in the principal sum
of the Dollar Equivalent of $575,000,0000. Capitalized terms not otherwise
defined herein are used with the respective meanings ascribed thereto in the
Credit Agreement.
In connection with this opinion we have examined: (a) a copy of the
Certificate of Incorporation of the Company certified to _______ __, 1997 by
the Secretary of State of Delaware and to ________ __, 1997 by an officer of
the Company, (b) a copy of the Bylaws of the Company certified to _______ __,
1997 by an officer of the Company, (c) copies of Certificates of Good Standing
of the Company under the laws of the States of Delaware and Michigan dated,
respectively, _________ __, 1997 and _____________ __, 1997, (d) a copy of
resolutions of the Board of Directors of the Company authorizing the execution,
delivery and performance of the Credit Agreement and the Notes, certified as
true and correct by an officer of the Company, (e) a certificate of incumbency
and specimen signatures of authorized officers of the Company, in the form
being delivered to the Agent pursuant to Section 8.3(d) of the Credit
Agreement, (f) a certificate of a senior officer of the Company, in the form
being delivered to the Agent pursuant to Section 8.3(e) of the Credit
Agreement, (g) a certificate of the chief ____ officer of the Company, in the
form being delivered to the Agent pursuant to Section 8.3(g) of the Credit
Agreement, and (h) the Credit Agreement and the Notes. We have also examined
the opinion of Mr. David B. Liner, Vice President and Corporate Counsel of the
Company, dated February __, 1997, addressed to you and delivered to the Agent
pursuant to Section 8.3(a) of the Credit Agreement. We have made no
independent investigation of any of the foregoing matters
<PAGE> 101
To the Banks, Co-Agents and Agent
September 2, 1997
Page 2
or of any other matters.
Based solely on such information, it is our opinion that: (a) the
documents referred to above and delivered by the Company are substantially
responsive to the requirements of the Credit Agreement; and (b) while we have
not independently considered the matters covered by the opinion of Mr. Liner
furnished pursuant to Section 8.3(a) of the Credit Agreement to the extent
necessary to enable us to express the conclusions stated therein, such opinion
is in substantially acceptable legal form and is substantially responsive to
the requirements of the Credit Agreement.
Very truly yours,
<PAGE> 102
EXHIBIT O
TERMS OF SUBORDINATION
These terms of subordination refer to the Credit Agreement dated as of
February 28, 1997 by and among MascoTech, Inc., the banks party thereto, the
co-agents referred to therein and NBD Bank, as agent.
In addition to Debt of the Company which qualifies as Subordinated
Debt pursuant to clauses (b) and (c) of the definition of Subordinated Debt in
the Credit Agreement, Subordinated Debt under the Credit Agreement shall also
include, without duplication, all Indebtedness (as hereinafter defined)
constituting Debt now outstanding or hereafter created, issued, guaranteed,
incurred or assumed by the Company which is subordinate to the payment of
principal, premium, if any, and interest on the Notes by provisions not less
favorable in any material respect to the holders of the Notes than the
provisions (a) of the Indenture dated as of November 1, 1986, by and between the
Company and Morgan Guaranty Trust Company of New York, as Trustee, as amended
and supplemented by Agreement of Appointment and Acceptance of Successor Trustee
dated as of August 4, 1994 among MascoTech, Inc., Morgan Guaranty Trust Company
of New York and The First National Bank of Chicago and the Supplemental
Indenture dated as of August 5, 1994 between MascoTech, Inc. and The First
National Bank of Chicago as Trustee a copy of which has been supplied to the
Agent and in the form in which it has been supplied to the Agent prior to the
Closing Date, and any Indebtedness of the Company that may be issued thereunder,
would be to the holders of "Senior Indebtedness", as that term is defined in
such Indenture, or (b) described below:
1. Defined Terms.
All capitalized terms used but not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement. All the following
terms shall have the meanings described below:
"Article" means Sections 1 through 13, inclusive, of this Exhibit O.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Cash Equivalents" means, at any time: (i) any evidence of Indebtedness
with a
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maturity of 180 days or less issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (ii) certificates of deposit, time deposits,
Eurodollar time deposits and bankers' acceptances with a maturity of 180 days or
less of any financial institution that is a member of the Federal Reserve System
having combined capital and surplus and undivided profits of not less than
$500,000,000; (iii) commercial paper with a maturity of 180 days or less issued
by a corporation that is not an Affiliate of the Company organized under the
laws of any state of the United States or the District of Columbia and rated at
least A-1 by S&P or at least P-1 by Moody's or at least an equivalent rating
category of another nationally recognized securities rating agency; and (iv)
repurchase agreements and reverse repurchase agreements relating to marketable
direct obligations issued or unconditionally guaranteed by the government of the
United States of America or issued by any agency thereof and backed by the full
faith and credit of the United States of America, in each case maturing within
180 days from the date of acquisition; provided that the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions With Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31, 1985.
"Credit Agreement" means (a) the Credit Agreement dated as of February __,
1997, by and among the Company, the banks party thereto, the co-agents referred
to therein and NBD Bank, as agent (the "MascoTech Credit Agreement"), together
with all amendments, documents and instruments from time to time delivered in
connection with the MascoTech Credit Agreement (including, without limitation,
any guaranty agreements and security documents), and as the MascoTech Credit
Agreement and such other agreements, documents and instruments may be amended,
amended and restated, renewed, extended, restructured, supplemented or otherwise
modified from time to time, and (b) any credit agreement, loan agreement, note
purchase agreement, indenture or other agreement, document or instrument
refinancing, refunding or otherwise replacing the MascoTech Credit Agreement or
any other agreement deemed a Credit Agreement under clause (a) hereof or this
clause (b), whether or not with the same agent, trustee, representative lenders
or holders, and irrespective of any changes in the terms and conditions thereof.
Without limiting the generality of the foregoing, the term "Credit Agreement"
shall include any amendment, amendment and restatement, renewal, extension,
restructuring, supplement or modification to any Credit Agreement, including any
agreement (i) extending the maturity of any Indebtedness incurred thereunder or
contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder, so long as borrowers and issuers include one or more of the Company
and its Subsidiaries and their respective successors and assigns or (iii)
increasing the amount of Indebtedness incurred thereunder or available to be
borrowed thereunder.
"Designated Senior Indebtedness" means (a) all Senior Indebtedness under
the
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Credit Agreement and (b) any other Senior Indebtedness which is specifically
designated by the Company in the instrument evidencing such Senior Indebtedness
as "Designated Senior Indebtedness".
"Indebtedness" means, with respect to any Person, without duplication, (a)
all liabilities of such Person for borrowed money or for the deferred purchase
price of property or services, excluding any trade payables and other accrued
current liabilities incurred in the ordinary course of business, but including,
without limitation, all obligations, contingent or otherwise, of such Person in
connection with any letters of credit, banker's acceptances or other similar
credit transaction, (b) all obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments, (c) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (d) all capitalized lease
obligations of such Person, (e) all Indebtedness referred to in the preceding
clauses (a) to (d) of other Persons and all dividends of other Persons, the
payment of which is secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness (the amount of such obligations being deemed to be
the lesser of the value of such property or asset or the amount of the
obligation so secured), (f) all guarantees of Indebtedness referred to in this
definition by such Person, (g) all redeemable capital stock of such Person
valued at the greater of its voluntary or involuntary maximum fixed repurchase
price plus accrued dividends, (h) all obligations under or in respect of
currency exchange contracts, interest rate swaps and other interest rate
protection obligations of such Person and i) any amendment, supplement,
modification, deferral, renewal, extension or refunding of any liability of the
types referred to in clauses (a) through (h) above. For purposes hereof, (x) the
"maximum fixed repurchase price" of any redeemable capital stock which does not
have a fixed repurchase price shall be calculated in accordance with the terms
of such redeemable capital stock as if such redeemable capital stock were
purchased on any date on which Indebtedness shall be required to be determined
pursuant hereto, and if such price is based upon, or measured by, the fair
market value of such redeemable capital stock, such fair market value shall be
determined in good faith by the board of directors of the issuer of such
redeemable capital stock, and (y) Indebtedness is deemed to be incurred pursuant
to a revolving credit facility each time an advance is made thereunder.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Non-Payment Default" means any event (other than a Payment Default) the
occurrence of which entitles one or more Persons to accelerate the maturity of
any
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Designated Senior Indebtedness.
"Payment Blockage Period" has the meaning set forth in Section 4.
"Payment Default" means any default in the payment of principal of (or
premium, if any, on) or interest on Designated Senior Indebtedness beyond any
applicable grace period with respect thereto.
"S & P" means Standard and Poor's Corporation and its successors.
"Securities" means any instrument or other document evidencing any of the
Subordinated Indebtedness at any time.
"Senior Indebtedness" means the principal of, premium, if any, and interest
on any Indebtedness of the Company, whether outstanding on the date hereof or
hereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Securities. Without limiting the
generality of the foregoing, "Senior Indebtedness" shall also include all
obligations of the Company, whether outstanding on the date hereof or thereafter
created, incurred or assumed, under or in respect of the Credit Agreement,
whether for principal, interest (including, without limitation, interest
accruing after the filing of a petition initiating any proceeding under any
state or federal bankruptcy law whether or not such interest is an allowable
claim), reimbursement of amounts drawn under letters of credit issued or
arranged for pursuant thereto, guarantees in respect thereof, and all charges,
fees, expenses (including reasonable fees and expenses of counsel) and other
amounts in respect of the Credit Agreement incurred by or owing to the Banks,
the Co-Agents or the Agent under the Credit Agreement or their representative,
agent or trustee, and all other obligations of the Company incurred under or in
respect of the Credit Agreement, including, without limitation, any interest
rate protection obligations and in respect of premiums, indemnities or
otherwise, and all indebtedness under the Credit Agreement which is disallowed,
avoided or subordinated pursuant to Section 548 of the Federal Bankruptcy Code
or any applicable state fraudulent conveyance law. Notwithstanding the
foregoing, "Senior Indebtedness" shall not include (a) Indebtedness evidenced by
the Securities, (b) Indebtedness that is expressly subordinate or junior in
right of payment to any Senior Indebtedness of the Company, (c) Indebtedness
which, when incurred and without respect to any election under Section 1111(b)
of the Federal Bankruptcy Code, is by its terms without recourse to the Company,
(d) any repurchase, redemption or other obligation in respect of redeemable
capital stock, (e) to the extent it might constitute Indebtedness, amounts owing
for goods, materials or services purchased in the ordinary course of business or
consisting of trade payables or other current liabilities (other than any
current liabilities owing under the Credit Agreement or the current portion
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<PAGE> 106
of any long-term Indebtedness which would constitute Senior Indebtedness but for
the operation of this clause (e)), (f) to the extent it might constitute
Indebtedness, amounts owed by the Company for compensation to employees or for
services rendered to the Company, (g) to the extent it might constitute
Indebtedness, any liability for federal, state, local or other taxes owed or
owing by the Company, (h) Indebtedness of the Company to a Subsidiary of the
Company or any other Affiliate of the Company or any of such Affiliate's
Subsidiaries and (i) that portion of any Indebtedness (other than owing pursuant
to the Credit Agreement), which at the time of issuance is issued in violation
of the Subordinated Indebtedness.
"Subordinated Indebtedness" means all indebtedness, obligations and
liabilities of the Company or any of its Subsidiaries to any of the holders of
the Securities issued pursuant hereto, whether now existing or hereafter
arising, including without limitation any extensions, renewals, increases or
other modifications thereof, all principal, interest and fees and costs under or
in any way arising therefrom, and all indebtedness, obligations and liabilities
of the Company or any of its Subsidiaries to any such holder under the Federal
Bankruptcy Code or under any similar state law.
"Subordinated Indenture" means the indenture pursuant to which the
Securities are issued.
"Trustee" means any Person acting as the trustee for the holders of the
Securities and any successor trustee.
"U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act of 1933, as amended), as custodian with respect to
any such U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the U.S. Government Obligation or the specific
payment of principal of or interest on the U.S. Government Obligation evidenced
by such depository receipt.
2. Subordinated Indebtedness Subordinated to Senior Indebtedness.
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The Company covenants and agrees, and each holder of any Subordinated
Indebtedness, by its acceptance thereof, likewise covenants and agrees, for the
benefit of the holders, from time to time, of Senior Indebtedness that, to the
extent and in the manner hereinafter set forth, the Subordinated Indebtedness is
hereby expressly made subordinate and subject in right of payment as provided
herein to the prior payment in full in cash or Cash Equivalents of all Senior
Indebtedness.
3. Payment over of Proceeds upon Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or its assets, or
(b) any liquidation, dissolution or other winding up of the Company, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (c) any assignment for the benefit of creditors or any other marshalling of
assets or liabilities of the Company, then and in any such event:
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or Cash Equivalents of all amounts due on or in respect
of all Senior Indebtedness, or provision shall be made for such payment, before
the holders of any Subordinated Indebtedness are entitled to receive any payment
or distribution of any kind or character (other than any payment or distribution
in the form of equity securities or subordinated securities of the Company or
any successor obligor with respect to the Senior Indebtedness provided for by a
plan of reorganization or readjustment that, in the case of any such
subordinated securities, are subordinated in right of payment to all Senior
Indebtedness that may at the time be outstanding to substantially the same
extent as, or to a greater extent than, the Subordinated Indebtedness is so
subordinated as provided in this Article (such equity securities or subordinated
securities hereinafter being "Permitted Junior Securities")); and
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities (other than a payment or
distribution in the form of Permitted Junior Securities), by set-off or
otherwise, to which the holders of the Subordinated Indebtedness or the Trustee
would be entitled but for the provisions of this Article shall be paid by the
liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise, directly to the holders of Senior Indebtedness or their
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any such Senior Indebtedness
may have been issued, ratably according to the aggregate amounts remaining
unpaid on account of the Senior Indebtedness held or represented by each, to the
extent necessary to make payment in
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full in cash or Cash Equivalents of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution to the holders of
such Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing provisions of
this Section, the Trustee or any holder of any Subordinated Indebtedness shall
have received any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, in respect of the
Subordinated Indebtedness before all Senior Indebtedness is paid in full or
payment thereof provided for in cash or Cash Equivalents, then and in such event
such payment or distribution (other than a payment or distribution in the form
of Permitted Junior Securities) shall be received and held in trust for the
benefit of the holders of Senior Indebtedness and paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full
in cash or Cash Equivalents, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of the Company
into, another Person or the liquidation or dissolution of the Company following
the conveyance, transfer or lease of its properties and assets substantially as
an entirety to another Person upon the terms and conditions set forth in the
Subordinated Indenture shall not be deemed a dissolution, winding up,
liquidation, reorganization, assignment for the benefit of creditors or
marshalling of assets and liabilities of the Company for the purpose of this
Article if the Person formed by such consolidation or into which the Company is
merged or the Person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance, transfer or lease, comply
with the conditions set forth in the Subordinated Indenture under which the
Securities are issued.
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4. Suspension of Payment When Senior Indebtedness in Default.
(a) Unless Section 3 shall be applicable, upon (1) the occurrence
of a Payment Default and (2) receipt by the Trustee of written notice of such
occurrence, then no payment or distribution of any assets of the Company of any
kind or character shall be made by the Company on account of the Subordinated
Indebtedness or on account of the purchase or redemption or other acquisition of
any Subordinated Indebtedness unless and until such Payment Default shall have
been cured or waived in writing or shall have ceased to exist or such Senior
Indebtedness shall have been discharged or paid in full in cash or Cash
Equivalents, after which the Company shall resume making any and all required
payments in respect of the Subordinated Indebtedness, including any missed
payments.
(b) Unless Section 3 shall be applicable, upon (1) the occurrence
of a Non-Payment Default and (2) receipt by the Company or the Trustee from the
representative of holders of such Designated Senior Indebtedness of written
notice of such occurrence, then no payment or distribution of any assets of the
Company of any kind or character shall be made by the Company on account of any
Subordinated Indebtedness or on account of the purchase or redemption or other
acquisition of any Subordinated Indebtedness for a period ("Payment Blockage
Period") commencing on the earlier of the date of receipt by the Company or the
date of receipt by the Trustee of such notice from such representative unless
and until (subject to any blockage of payments that may then be in effect under
paragraph (a) of this Section) (x) more than 179 days shall have elapsed since
receipt of such written notice by the Company or the Trustee, whichever was
earlier, (y) such Non-Payment Default shall have been cured or waived in writing
or shall have ceased to exist or such Designated Senior Indebtedness shall have
been discharged or (z) such Payment Blockage Period shall have been terminated
by written notice to the Company or the Trustee from such representative
initiating such Payment Blockage Period, after which, in the case of clause (x),
(y) or (z), the Company shall resume making any and all required payments in
respect of any Subordinated Indebtedness, including any missed payments.
Notwithstanding any other provision of this Agreement, only one Payment Blockage
Period may be commenced within any consecutive 360-day period, and no event of
default with respect to Designated Senior Indebtedness which existed or was
continuing on the date of the commencement of any Payment Blockage Period
initiated by or on behalf of such Designated Senior Indebtedness shall be, or be
made, the basis for the commencement of a second Payment Blockage Period whether
or not within a period of 360 consecutive days unless such event of default
shall have been cured or waived for a period of not less than 90 consecutive
days subsequent to the commencement of such initial Payment Blockage Period (it
being acknowledged that any subsequent action, or any breach of any financial
covenant for a period commencing after the date of commencement of such Payment
Blockage Period, that, in either case, would give rise to a Non-Payment
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Default pursuant to any provision under which a Non-Payment Default previously
existed or was continuing shall constitute a new Non-Payment Default for this
purpose; provided that, in the case of a breach of a particular financial
covenant, the Company shall have been in compliance for at least one full period
of not less than 90 consecutive days commencing after the date of commencement
of such Payment Blockage Period). In no event will a Payment Blockage Period
extend beyond 179 days from the date of the receipt by the Trustee of the notice
and there must be a 181-consecutive day period in any 360-day period during
which no Payment Blockage Period is in effect.
(c) In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Trustee or the holder of any Subordinated
Indebtedness prohibited by the foregoing provisions of this Section, then and in
such event such payment shall be received and held in trust for the benefit of
the holders of Senior Indebtedness and paid over and delivered forthwith to the
Company.
5. Payment Permitted If No Default.
Nothing contained herein or in any instrument evidencing the
Subordinated Indebtedness shall prevent the Company, at any time except during
the pendency of any case, proceeding, dissolution, liquidation or other winding
up, assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 3 or under the conditions
described in Section 4, from making payments at any time of principal of (and
premium, if any, on) or interest on the Subordinated Indebtedness.
6. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full in cash or Cash Equivalents of all
Senior Indebtedness, the holders of the Subordinated Indebtedness shall be
subrogated to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of (and premium, if any, on) and
interest on the Subordinated Indebtedness shall be paid in full. For purposes
of such subrogation, no payments or distributions to the holders of Senior
Indebtedness of any cash, property or securities to which the holders of the
Subordinated Indebtedness or the Trustee would be entitled except for the
provisions in this Article, shall, as among the Company, its creditors other
than holders of Senior Indebtedness, and the holders of the Subordinated
Indebtedness, be deemed to be a payment or distribution by the Company to or on
account of the Senior Indebtedness.
7. Provisions Solely to Define Relative Rights.
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The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the holders of the Subordinated
Indebtedness on the one hand and the holders of Senior Indebtedness on the other
hand. Nothing contained in this Article or elsewhere in the Subordinated
Indenture or in any Securities is intended to or shall (a) impair, as between
the Company and the holders of the Subordinated Indebtedness, the obligation of
the Company, which is absolute and unconditional, to pay to the holders of the
Securities the principal of (and premium, if any, on) and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
holders of the Securities and creditors of the Company other than the holders of
Senior Indebtedness; or (c) prevent the Trustee or the holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under the Subordinated Indenture, subject to the rights, if any, under this
Article of the holders of Senior Indebtedness.
8. Trustee to Effectuate Subordination.
Each holder of any Security by its acceptance thereof authorizes and
directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee its attorney-in-fact for any and all such purposes.
9. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by the Company with the terms, provisions and covenants
of the Subordinated Indenture, regardless of any knowledge thereof any such
holder may have or be otherwise charged with.
(b) Without in any way limiting the generality of paragraph (a)
of this Section 9, the holders of Senior Indebtedness may, at any time and from
time to time, without the consent of or notice to the Trustee or the holders of
the Securities, without incurring responsibility to the holders of the
Securities and without impairing or releasing the subordination provided in this
Article or the obligations hereunder of the holders of the Subordinated
Indebtedness to the holders of Senior Indebtedness, do any one or more of the
following: (1) change the manner, place or terms of payment or extend the time
or payment of, or renew or alter, Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding; (2) sell, exchange,
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release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (3) release any Person liable in any manner for
the collection of Senior Indebtedness; and (4) exercise or refrain from
exercising any rights against the Company or any other Person.
10. Notice to Trustee
(a) The Company shall give prompt written notice to the Trustee
of any fact known to the Company which would prohibit the making of any payment
to or by the Trustee in respect of the Securities. Notwithstanding the
provisions of this Article or any other provision of the Subordinated Indenture,
the Trustee shall not be charged with knowledge of the existence of any facts
which would prohibit the making of any payment to or by the Trustee in respect
of the Securities, unless and until the Trustee shall have received written
notice thereof from the Company or a holder of Senior Indebtedness or from any
trustee, fiduciary or agent therefor; and, prior to the receipt of any such
written notice, the Trustee shall be entitled in all respects to assume that no
such facts, subject to Sections 3.15(a) through 3.15(d) of the Trust Indenture
Act of 1939, exist; provided, however, that, if the Trustee shall not have
received the notice as provided for in this Section 10 at least three Business
Days prior to the date upon which by the terms hereof any money may become
payable for any purpose (including, without limitation, the payment of the
principal of (and premium, if any, on) or interest on any Security), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within three Business Days
prior to such date.
(b) The Trustee shall be entitled to rely on the delivery to it
of a written notice by a Person representing itself to be a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor) to establish that such
notice has been given by a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor). In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article and, if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
-11-
<PAGE> 113
11. Reliance on Judicial Order or Certificate of Liquidating Agent
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to Sections 3.15(a) through 3.15(d) of the
Trust Indenture Act of 1939, and the holders of the Securities shall be entitled
to rely upon any order or decree entered by any court of competent jurisdiction
in which any insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Trustee or to the holders of
Securities, for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article.
12. Rights of Trustee As a Holder of Senior Indebtedness;
Preservation of Trustee's Rights
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in the Subordinated Indenture shall deprive the
Trustee of any of its rights as such holder. Nothing in this Article shall
apply to the fees and expenses, and other claims of and payments to, the Trustee
in its capacity as trustee under the Subordinated Indenture.
13. No Suspension of Remedies.
Nothing in this Article shall limit the right of the Trustee or the
holders of Securities to take any action to accelerate the maturity of the
Securities or to pursue any rights or remedies hereunder or under applicable
law, provided that the right to receive payment on the Subordinated Indebtedness
is subject to the provisions of Sections 3 and 4.
14. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments
from cash or the proceeds of U.S. Government Obligations held in trust under the
Subordinated Indenture by the Trustee (or other qualifying trustee) and which
were deposited in accordance with the terms of the Subordinated Indenture and
not in violation of this Article for the payment of principal of (and premium,
if any, on) and interest on the Securities shall not be subordinated to the
prior payment of any Senior Indebtedness or subject to the restrictions set
forth in this Article, and none of the holders of the Subordinated Indebtedness
shall be obligated to pay over any such amount to the Company or any holder of
Senior Indebtedness or any other creditor of the Company.
-12-
<PAGE> 114
SCHEDULE 1
TO
ASSIGNMENT AND ACCEPTANCE
Percentage interest of Assignor's Commitment
assigned: $____________%
Assignee's Commitment: $_____________
Aggregate outstanding principal amount
of Syndicated Loans assigned: $_____________
Effective Date (if other than date of
acceptance by Agent): ______________
[NAME OF ASSIGNOR], as Assignor
By ______________________________
Its:
Dated: ____________________, 19__
[NAME OF ASSIGNEE], as Assignee
By ______________________________
Its:
Domestic Lending Office:
Eurodollar Lending Office:
Consented to and Consented to this ___ day
accepted this ___ day of ___________________, 19__
of ____________, 19__
NBD Bank, as Agent MascoTech, Inc.
By: ___________________________ By: _____________________________
Its: ______________________ Its: ________________________
<PAGE> 115
SCHEDULE 2
City of Fort Wayne, Indiana Industrial Development Revenue Bonds (ND Tech
Project)
<PAGE> 116
SCHEDULE 1
Applicable Margin for Eurodollar Rate Syndicated Loans and Letters of Credit
<TABLE>
<CAPTION>
APPLICABLE MARGIN Interest Coverage Interest Coverage Interest Coverage
FOR EURODOLLAR RATE Ratio equal to or Ratio equal to or Ratio equal to or Interest Coverage
SYNDICATED LOANS Interest Coverage greater than 2.00:1.00 greater than greater than Ratio equal to or
AND LETTERS OF Ratio less than and less than 3.00:1.00 and less 4.25:1.00 and less greater than
CREDIT CHART 2.00:1.00 3.00:1.00 than 4.25:1.00 than 5.25:1.00 5.25:1.00
<S> <C> <C> <C> <C> <C>
Senior Leverage
Ratio greater than
1.15:1.00 1.00% 0.75% 0.625% 0.50% 0.40%
Senior Leverage
Ratio equal to or
less than 1.15:1.00
and greater than
0.80:1.00 0.80% 0.625% 0.50% 0.40% 0.325%
Senior Leverage
Ratio equal to or
less than 0.80:1.00
and greater than
0.55:1.00 0.675% 0.50% 0.40% 0.325% 0.25%
Senior Leverage
Ratio equal to or
less than 0.55:1.00 0.55% 0.40% 0.325% 0.25% 0.25%
</TABLE>
PAGE 1 of 3
<PAGE> 117
SCHEDULE 1 (CONTINUED)
Applicable Margin for CD Rate Loans
<TABLE>
<CAPTION>
Interest Coverage Interest Coverage Interest Coverage
Ratio equal to or Ratio equal to or Ratio equal to or Interest Coverage
APPLICABLE MARGIN Interest Coverage greater than 2.00:1.00 greater than greater than Ratio equal to or
FOR CD RATE LOANS Ratio less than and less than 3.00:1.00 and less 4.25:1.00 and less greater than
CHART 2.00:1.00 3.00:1.00 than 4.25:1.00 than 5.25:1.00 5.25:1.00
<S> <C> <C> <C> <C> <C>
Senior Leverage
Ratio greater than
1.15:1.00 1.125% 0.875% 0.750% 0.625% 0.525%
Senior Leverage
Ratio equal to or
less than 1.15:1.00
and greater than
0.80:1.00 0.925% 0.750% 0.625% 0.525% 0.450%
Senior Leverage
Ratio equal to or
less than 0.80:1.00
and greater than
0.55:1.00 0.800% 0.625% 0.525% 0.450% 0.375%
Senior Leverage
Ratio equal to or
less than 0.55:1.00 0.675% 0.525% 0.450% 0.375% 0.375%
</TABLE>
PAGE 2 of 3
<PAGE> 118
SCHEDULE 1 (CONTINUED)
Applicable Margin for Facility Fees
<TABLE>
<CAPTION>
Interest Coverage Interest Coverage Interest Coverage
Ratio equal to or Ratio equal to or Ratio equal to or Interest Coverage
APPLICABLE MARGIN Interest Coverage greater than 2.00:1.00 greater than greater than Ratio equal to or
FOR FACILITY FEES Ratio less than and less than 3.00:1.00 and less 4.25:1.00 and less greater than
CHART 2.00:1.00 3.00:1.00 than 4.25:1.00 than 5.25:1.00 5.25:1.00
<S> <C> <C> <C> <C> <C>
Senior Leverage
Ratio greater than
1.15:1.00 0.25% 0.225% 0.225% 0.20% 0.175%
Senior Leverage
Ratio equal to or
less than 1.15:1.00
and greater than
0.80:1.00 0.225% 0.225% 0.20% 0.175% 0.15%
Senior Leverage
Ratio equal to or
less than 0.80:1.00
and greater than
0.55:1.00 0.225% 0.20% 0.175% 0.15% 0.125%
Senior Leverage
Ratio equal to or
less than 0.55:1.00 0.20% 0.175% 0.150% 0.125% 0.125%
</TABLE>
PAGE 3 of 3
<PAGE> 1
EXHIBIT 10.g
CONFORMED COPY
PROMISSORY NOTE
$151,375,000.00 October 31, 1996
FOR VALUE RECEIVED, MascoTech, Inc., a Delaware corporation with its
principal offices located at 21001 Van Born Road, Taylor, Michigan 48180
("MascoTech"), hereby promises to pay to the order of Masco Corporation, a
Delaware corporation with its principal offices located at 21001 Van Born Road,
Taylor, Michigan 48180 ("Payee"), in lawful money of the United States of
America, the principal sum of One Hundred Fifty One Million Three Hundred
Seventy Five Thousand Dollars ($151,375,000.00) (the "Principal Amount"),
together with interest, in accordance with the terms hereof.
This Note is referred to in, and issued pursuant to, that certain Stock
Purchase Agreement, dated as of October 15, 1996, by and between MascoTech and
Payee (the "Stock Purchase Agreement"). Capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Stock
Purchase Agreement.
The Principal Amount shall be due and payable in one, lump-sum payment on
September 30, 1997 (the "Maturity Date"). Interest from the date hereof on the
unpaid Principal Amount shall accrue at the per annum rate of six and
five-eights percent (6-5/8%), and shall be payable in four installments on
December 31, 1996, March 31, 1997, June 30, 1997 and September 30, 1997.
Notwithstanding the first paragraph of this Note, MascoTech may repay all
or any portion of the Principal Amount and any accrued interest thereon by
transferring any publicly-traded securities (debt or equity) of Emco Limited
that MascoTech holds at the time of payment which were held on the date hereof.
Any such Emco Limited securities shall be valued at an amount equal to 97% of
the average of the closing prices for such securities on the Toronto Stock
Exchange during the 20 trading days ending on the third day prior to the date
of payment, expressed in U.S. Dollars at the prevailing exchange rate on the
date of payment. Any such payment in Emco Limited securities shall be subject
to applicable regulatory approvals, which MascoTech and Payee agree to
diligently seek to obtain upon MascoTech's written notice to Payee of its
intention to transfer to Payee any Emco Limited securities.
This Note may be prepaid in whole at any time or in part from time to
time, with accrued interest, without penalty or premium.
MascoTech agrees to pay all costs of collection of any amounts due
hereunder when incurred, including, without limitation, reasonable attorneys'
fees and expenses, unless prohibited by law.
<PAGE> 2
MascoTech hereby waives presentment for payment, demand, notice of
dishonor, notice of protest and all other notices and demands in connection
with the delivery, acceptance, performance or default of this Note and agrees
that this Note may not be changed, modified or terminated orally, but only by
an agreement in writing signed by MascoTech and Payee.
This Note shall become immediately due and payable upon notice by Payee to
MascoTech if one or more of the following events shall have occurred and be
continuing (except in the case of the events specified in clauses (e) and (f)
in which event this Note shall become immediately due and payable without any
such notice):
(a) any event or condition shall occur which results in the acceleration
of the maturity of any indebtedness for borrowed money in excess of
$10,000,000 or enables (or, with the giving of notice or lapse of time or
both, would enable) the holder of such indebtedness or any person acting
on such holder's behalf to accelerate the maturity thereof;
(b) default in the payment of interest upon this Note when it becomes due
and payable and continuance of such default for a period of 5 days; or
(c) default in the payment of all or any part of the principal of this
Note as and when the same shall become due and payable;
(d) any representation or warranty of MascoTech in the Stock Purchase
Agreement should prove to have been incorrect in any material respect
when made or deemed made;
(e) MascoTech shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make
a general assignment for the benefit of creditors;
(f) an involuntary case or other proceeding shall be commenced against
MascoTech seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against MascoTech under the
federal bankruptcy laws as now or hereafter in effect;
(g) a judgment or order for the payment of money in excess of $5,000,000
shall be rendered against MascoTech and such judgment or order shall
continue unsatisfied and unstayed for a period of 20 days.
<PAGE> 3
This Note shall be governed by, and construed in accordance with, the law
of the State of Michigan.
Any notice or other communication under this Note shall be in writing and
shall be considered given when mailed by certified or registered mail, return
receipt requested, to the Chief Financial Officer of MascoTech or the Payee, as
the case may be, at the address set forth in the first paragraph of this Note
(or at such other address as either party may specify by notice to the other).
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed in
its corporate name by a duly authorized officer, as of the date first written
above.
MASCOTECH, INC.
By: /s/ Timothy Wadhams
-----------------------------------
Name: Timothy Wadhams
Title: Vice President
<PAGE> 1
EXHIBIT 10.h
CONFORMED COPY
PROMISSORY NOTE
$7,625,000.00 October 31, 1996
FOR VALUE RECEIVED, MascoTech, Inc., a Delaware corporation with its
principal offices located at 21001 Van Born Road, Taylor, Michigan 48180
("MascoTech"), hereby promises to pay to the order of Richard A. Manoogian, c/o
Masco Corporation, 21001 Van Born Road, Taylor, Michigan 48180 ("Payee"), in
lawful money of the United States of America, the principal sum of Seven
Million Six Hundred Twenty Five Thousand Dollars ($7,625,000.00) (the
"Principal Amount"), together with interest, in accordance with the terms
hereof.
This Note is referred to in, and issued pursuant to, that certain Stock
Purchase Agreement, dated as of October 15, 1996, by and between MascoTech and
Payee (the "Stock Purchase Agreement"). Capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Stock
Purchase Agreement.
The Principal Amount shall be due and payable in one, lump-sum payment on
September 30, 1997 (the "Maturity Date"). Interest from the date hereof on the
unpaid Principal Amount shall accrue at the per annum rate of six and
five-eights percent (6-5/8%), and shall be payable in four installments on
December 31, 1996, March 31, 1997, June 30, 1997 and September 30, 1997.
This Note may be prepaid in whole at any time or in part from time to
time, with accrued interest, without penalty or premium.
MascoTech agrees to pay all costs of collection of any amounts due
hereunder when incurred, including, without limitation, reasonable attorneys'
fees and expenses, unless prohibited by law.
MascoTech hereby waives presentment for payment, demand, notice of
dishonor, notice of protest and all other notices and demands in connection
with the delivery, acceptance, performance or default of this Note and agrees
that this Note may not be changed, modified or terminated orally, but only by
an agreement in writing signed by MascoTech and Payee.
This Note shall become immediately due and payable upon notice by Payee to
MascoTech if one or more of the following events shall have occurred and be
continuing (except in the case of the events specified in clauses (e) and (f)
in which event this Note shall become immediately due and payable without any
such notice):
(a) any event or condition shall occur which results in the acceleration
of the maturity of any indebtedness for borrowed money in excess of
$10,000,000 or enables (or, with the
<PAGE> 2
giving of notice or lapse of time or both, would enable) the holder of
such indebtedness or any person acting on such holder's behalf to
accelerate the maturity thereof;
(b) default in the payment of interest upon this Note when it becomes due
and payable and continuance of such default for a period of 5 days; or
(c) default in the payment of all or any part of the principal of this
Note as and when the same shall become due and payable;
(d) any representation or warranty of MascoTech in the Stock Purchase
Agreement should prove to have been incorrect in any material respect
when made or deemed made;
(e) MascoTech shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make
a general assignment for the benefit of creditors;
(f) an involuntary case or other proceeding shall be commenced against
MascoTech seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against MascoTech under the
federal bankruptcy laws as now or hereafter in effect;
(g) a judgment or order for the payment of money in excess of $5,000,000
shall be rendered against MascoTech and such judgment or order shall
continue unsatisfied and unstayed for a period of 20 days.
This Note shall be governed by, and construed in accordance with, the law
of the State of Michigan.
Any notice or other communication under this Note shall be in writing and
shall be considered given when mailed by certified or registered mail, return
receipt requested, to the Chief Financial Officer of MascoTech or to the Payee,
as the case may be, at the address set forth in the first paragraph of this
Note (or at such other address as either party may specify by notice to the
other).
<PAGE> 3
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed in
its corporate name by a duly authorized officer, as of the date first written
above.
MASCOTECH, INC.
By: /s/ Timothy Wadhams
--------------------------------------------
Name: Timothy Wadhams
Title: Vice President
<PAGE> 1
EXHIBIT 10.v
April 21, 1992
Mr. Brian P. Campbell, President
TriMas Corporation
315 E. Eisenhower Parkway
Suite 300
Ann Arbor, Michigan 48180
Dear Brian:
This will confirm our understanding to modify the Registration Agreement
dated December 27, 1988 among TriMas Corporation, Masco Corporation and Masco
Industries (the "Registration Agreement"). The Registration Agreement
currently limits Masco Corporation and Masco Industries from requesting more
than one registration within a period of twelve months. At the request of your
underwriters, each of Masco Corporation and Masco Industries agrees that it
will not, for a period of 120 days after the effective date of TriMas'
definitive prospectus relating to its proposed offering of Common Stock,
provided that such effective date is prior to May 15, 1992, (i) offer for sale,
sell, contract to sell or otherwise dispose of any shares of TriMas Common
Stock, or (ii) exercise any Common Stock registration rights granted to each of
them in the Registration Agreement (including but not limited to requesting
registration of shares owned by others).
In return for the foregoing, and whether or not TriMas' current
registration statement is declared effective, TriMas agrees that the
Registration Agreement is hereby modified so that if Masco Corporation or Masco
Industries requests registration of shares of TriMas Common Stock heretofore
sold to the respective executives of Masco Corporation and Masco Industries
pursuant to the Executive Agreements (as defined below), and such registration
is filed during 1992, they may also request that TriMas file not earlier than
January 1, 1993 a second registration statement covering additional such shares
of TriMas Common Stock heretofore sold pursuant to the Executive Agreements,
even if such second registration is within twelve months of the effective date
of the initial filing during 1992 (so long as such request otherwise complies
with the terms of the Registration Agreement and is made not less than 90 days
from the date of the initial such request). It is understood that if a
registration request is made in 1992 and the registration statement is for any
reason not filed during 1992, Masco Corporation or Masco Industries shall be
entitled, prior to filing, to increase the number of shares covered by such
request. All other provisions contained in the Registration Agreement
including but not limited to those limiting registration requests are
unaffected hereby.
<PAGE> 2
In connection with the foregoing, we advise you as follows:
1. All executives who have purchased TriMas stock from Masco Corporation
or Masco Industries have done so pursuant to the agreements which shall be
provided to you prior to any request for registration (the "Executive
Agreements").
2. None of the executives who have purchased TriMas stock pursuant to the
Executive Agreements have notified Masco Corporation or Masco Industries that
they wish to sell any of their TriMas stock in the immediate future.
3. The Executive Agreements currently contain restrictions on sales of stock by
the executive which do not permit the executives to sell in a registered
offering more than 50% of such executive's TriMas stock subject to the
Executive Agreements during 1992, and 75% of such stock by the end of 1993.
Masco Corporation and Masco Industries will not amend, waive or modify the
Executive Agreements to permit any sales in a registered offering in excess of
these restrictions.
Please confirm TriMas' agreement with the modifications set forth above
which will become effective upon signature as provided below.
Sincerely,
MASCO CORPORATION MASCO INDUSTRIES, INC.
By /s/ Richard A. Manoogian By /s/ Richard A. Manoogian
--------------------------- ---------------------------
Richard A. Manoogian Richard A. Manoogian
TriMas Corporation and the Oversight Committee of its Board of Directors concur
with the foregoing.
TRIMAS CORPORATION OVERSIGHT COMMITTEE
By /s/ Brian P. Campbell By /s/ Herbert S. Amster
------------------------ ----------------------------
Brian P. Campbell Herbert S. Amster
By /s/ Helmut F. Stern
----------------------------
Helmut F. Stern
<PAGE> 3
AMENDMENT TO REGISTRATION AGREEMENT
This is an Amendment dated as of May 15, 1996 to a Registration Agreement
dated as of December 27, 1988 and amended as of April 21, 1992, January 5, 1993
and May 26, 1994 (the "Registration Agreement") among TriMas Corporation, a
Delaware corporation ("TriMas"), Masco Corporation, a Delaware corporation
("Masco"), and MascoTech, Inc. (formerly Masco Industries, Inc.), a Delaware
corporation ("Industries").
WHEREAS, TriMas, Masco, and Industries wish to amend the Registration
Agreement to alter the arrangements for registration of the Executive Shares
owned by Richard A. Manoogian.
NOW, THEREFORE, the parties hereto agree as follows:
A. The second sentence of Paragraph 1(b) of the Registration Agreement is
hereby amended by deleting the year "1996" and by substituting therefor the
year "1997".
B. Except as provided herein, the Registration Agreement shall remain in
full force and effect and not otherwise be modified or affected by the
provisions hereof. This Amendment to Registration Agreement may be executed in
multiple counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Amendment to
Registration Agreement as of the date first set forth above.
MASCO CORPORATION MASCOTECH, INC.
By /s/Richard A. Manoogian By /s/Richard A. Manoogian
-------------------------- --------------------------
Richard A. Manoogian Richard A. Manoogian
Chairman Chairman
TRIMAS CORPORATION TRIMAS OVERSIGHT COMMITTEE
By /s/Brian P. Campbell By /s/Herbert S. Amster
----------------------- ---------------------------
Brian P. Campbell Herbert S. Amster
President
By /s/ Helmut F. Stern
---------------------------
Helmut F. Stern
<PAGE> 4
ACKNOWLEDGMENT
I acknowledge that the Letter Agreements with each of Masco Corporation
and MascoTech, Inc. dated as of June 29, 1989 are amended to conform with the
Registration Agreement, as amended, and that the Letter Agreements shall
otherwise continue in full force and effect.
/s/Richard A. Manoogian
----------------------------------
Richard A. Manoogian
<PAGE> 1
EXHIBIT 10.w
CONFORMED
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of this 23rd day of December, 1991 by and
between Masco Corporation, a Delaware corporation ("Masco"), and Masco
Industries, Inc., a Delaware corporation ("Industries").
Masco and Industries each own one share of the two issued and outstanding
shares of Masco Capital Corporation, a Delaware corporation ("Masco Capital"),
which has been jointly managed by Masco and Industries. Its most significant
investment was the Junior Subordinated Discount Debentures of Payless Cashways,
Inc. which were recently sold. Related bank loans and indebtedness to the
shareholders have been fully repaid. Masco Capital has also made a
distribution of its retained earnings.
Due to Masco Capital's reduced scope, Masco and Industries deem it
appropriate to place the management of Masco Capital under the exclusive
control of Masco. Further, Industries desires a return of its original capital
investment and to be relieved of the responsibility to provide additional funds
to satisfy its pro rata portion of Masco Capital's future funding obligations.
Accordingly, Industries has agreed to sell and Masco has agreed to purchase
Industries' 50% interest in Masco Capital. In light of the fact that Masco
Capital's investments generally have no public market, their current value,
which is believed to be in excess of the current book value, is uncertain. The
parties anticipate that the uncertainty will significantly decrease over the
next three years as the investments are liquidated. Therefore, the parties
have structured this purchase and sale to pay Industries a small premium over
its current carrying cost of Masco Capital and to provide that Industries will
be in at least as favorable an after-tax financial position at the time of
settlement of obligations as it would have been in if the Masco Capital
investment portfolio were frozen as of December 20, 1991 and then liquidated
over time and the proceeds of the liquidation distributed prior to December 31,
1994.
NOW, THEREFORE, in consideration of the above premises and the agreements
set forth herein, the parties hereto agree as follows:
1. Conditions Precedent. The respective obligations of Masco and
Industries to consummate the transactions contemplated by this Agreement are
subject to (i) the approval on behalf of Masco by the Oversight Committee of
the Masco Board of Directors and (ii) the approval on behalf of Industries by
the Oversight Committee of the Industries Board of Directors.
-1-
<PAGE> 2
2. Agreement to Purchase and Sell. Subject to the terms and conditions of
this Agreement, Industries agrees to sell, transfer and convey all of its
right, title and interest in and to one share of the capital stock, par value
$1.00 per share, of Masco Capital (the "Masco Capital Share") and Masco agrees
to purchase the Masco Capital Share.
3. Delivery by Industries. At the Closing of the transactions
contemplated hereby (the "Closing"), Industries shall deliver to Masco a
certificate representing the Masco Capital Share registered in the name of
Industries and endorsed to Masco Corporation. The Closing shall be held at the
offices of Masco Capital in Taylor, Michigan on December 30, 1991 at 10:00 a.m.
or at such other time or place as mutually agreed upon by the parties hereto.
4. Payment. The aggregate purchase price shall be equal to the sum of (i)
the Closing Price (as hereinafter defined) and (ii) (A) one-half of the
Incremental Value (as hereinafter defined) less (B) $5,200,000, and less (C)
interest on the Closing Price accrued and compounded annually at a rate
equivalent to Masco's average after-tax cost of bank borrowing from the Closing
to the date of payment of such one-half of the Incremental Value; provided,
however, that if Masco has no bank borrowings at a time during the term hereof,
the interest rate during such time shall be the equivalent of an after-tax cost
of 1% under the Prime Rate of NBD Bank, N.A. The aggregate purchase price
shall be payable as follows:
(a) The Closing Price shall be $49,451,500 (representing 50% of the Net
Book Value indicated on the balance sheet Masco Capital prepared as of December
20, 1991 and heretofore initialled by the parties plus $5,200,000) and shall be
paid upon the delivery of the Masco Capital Share as provided in Section 3.
For purposes of this Agreement, the term Net Book Value shall mean Total
Shareholders' Equity of Masco Capital without reflecting any write up or write
down in the carrying value of the assets or liabilities of Masco Capital as a
result of a change in the fair market value of such assets or liabilities.
(b) Subject to the provisions of Section 10 hereof, the amount determined
under Section 4(ii) shall be paid at the earlier of (i) thirty days after the
date on which the Valuation (as hereinafter defined) is completed but no later
than December 31, 1994 and (ii) thirty days after the date on which the last of
the Investments (as hereinafter defined) shall have been sold, liquidated or
otherwise turned into cash.
(c) Investments shall mean the investments and assets of Masco Capital
existing on December 20, 1991.
(d) Incremental Value shall mean the total of:
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(i) for Investments that are sold, liquidated or otherwise turned
into cash, the aggregate of the gain or loss on each such Investment
determined with reference to the carrying cost of each such Investment;
plus or minus
(ii) for Investments which have not been sold, liquidated or
otherwise turned into cash, and all non-cash proceeds (received or
receivable) relating thereto, including, without limitation, dividends,
interest, additional securities and securities derived from such
Investments by way of reorganization, recapitalization or otherwise (the
"Proceeds"), the aggregate gain or loss determined with reference to the
carrying cost of each such Investment and based on a Valuation of such
Investment (and Proceeds) on September 30, 1994; plus
(iii) the aggregate of Masco Capital's dividend and interest income
from (x) the Investments, (y) the Proceeds thereof and (z) cash realized
on sale, liquidation or otherwise turning into cash of Investments from
December 20, 1991 until September 30, 1994; minus
(iv) all management and other fees relating to the Investments paid
or payable to the investment advisors and managers of the partnerships
which hold the Investments and all legal, accounting, management and
other expenses reasonably incurred by Masco Capital relating to
Investments, in each case from December 20, 1991 until September 30,
1994; minus
(v) all federal, state and local taxes paid or payable on the
aggregate income from the Investments, including without limitation
dividends, interest and the gain and loss of such Investments which have
been sold, liquidated or otherwise turned into cash and an appropriate
reserve (to be determined by Masco in its sole discretion) to cover all
such taxes which may be due after September 30, 1994 based on the
Valuation of all Investments which have not been sold, liquidated or
otherwise turned into cash at such date.
(e) For purposes of this Agreement, Valuation shall mean the value placed
on the Investments (and Proceeds), which have not been sold, liquidated or
otherwise turned into cash on or before September 30, 1994, by the respective
Oversight Committees of the Boards of Directors of Masco and Industries acting
jointly. However, if such directors do not unanimously agree on such value,
the value of the Investments (and Proceeds) shall be determined by the
valuation department or group of Masco's independent public accountants (which,
unless Masco informs Industries otherwise, shall be Coopers & Lybrand), and the
persons performing the valuation (the "Valuation Group") shall take into
account all relevant business and management considerations using customary
valuation techniques. If at such time Masco's independent public
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accountants do not have a valuation department or group, then Masco shall
have the right to select another independent entity to serve as the "Valuation
Group" which, in Masco's reasonable judgment, is experienced and reputable with
respect to such matters. All determinations by the Valuation Group shall be
final and binding.
(f) Masco and Industries acknowledge that the Net Book Value of
$88,503,000 is based on the best information contained in the books and records
of Masco Capital at December 20, 1991. As soon as practicable after the
Closing (but no later than February 1, 1992) Masco Capital shall prepare a
final balance sheet as of December 20, 1991 based on the books and records of
Masco Capital setting forth an exact Net Book Value and deliver such balance
sheet to Masco and Industries. If Industries shall not have delivered a
written objection to Masco within 10 business days of receipt of such balance
sheet, such balance sheet will become final. If the Oversight Committee of the
Industries Board of Directors does deliver a timely written objection with
which Masco does not agree, the balance sheet will be delivered to Coopers &
Lybrand for a final determination of the correct Net Book Value, which shall be
made no later than March 15, 1992. Upon the final determination of the Net
Book Value on such balance sheet, Masco and Industries shall adjust the Closing
Price based thereon by, (A) if such Net Book Value has increased from
$88,503,000, paying one-half of such increase to Industries in cash within 3
business days of such determination and (B) if such Net Book Value has
decreased, by deducting such decrease from the Incremental Value. Masco
Capital shall also prepare a definitive list of Investments and the carrying
cost thereof as of the Closing.
(g) In no event shall the purchase price hereunder be less than the
Closing Price as finally determined pursuant to Section 4(f) hereof.
5. Subsequent Fundings by Masco. (a) If after December 20, 1991 Masco
should provide any additional funds to Masco Capital, Industries shall not
share in any gain or loss resulting from such funds or be paid any amount as
interest, dividends or otherwise relating thereto and any interest expense on
such additional funds shall be disregarded for all purposes hereunder.
(b) Notwithstanding the determination of Incremental Value in accordance
with Section 4 hereof, if during the term hereof Masco Capital supplies funds
to a partnership for an investment in an existing Investment and such
additional investment has an impact on the value of the Investment which is
disproportionate to the Investment (as valued by the Oversight Committees
acting jointly at the time of such additional investment) and not reflected in
the value of any security received by Masco in respect of such additional
investment, the Valuation of such Investment (and Proceeds) at September 30,
1994 (or, in the case of an Investment previously sold, liquidated, or
otherwise turned into cash, the amount of gain or loss realized and Proceeds
thereof) shall be
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equitably adjusted by action of the Committees or, if such
Committees cannot reach unanimous agreement, by the Valuation Group provided in
Section 4(e).
6. Termination of Fee Agreement. The Fee Agreement dated as of December
16, 1988 among Masco, Industries and Masco Capital is hereby terminated as of
December 20, 1991 and no liability of any kind will arise to either party from
prior performance or neglect of its terms other than payment of fees up to and
including such date.
7. Payless Preferred Supplier Agreement. It is Masco's current
intention, so long as Masco is a party to the Supply Agreement dated as of
August 4, 1988 by and between Masco and Payless Cashways, Inc., that Masco
shall continue to designate Industries and its subsidiaries "affiliated
companies" under Article I thereof; provided, however, that Masco is under no
obligation to keep the Supply Agreement in effect, and provided further that
Masco may in its sole discretion terminate such designation at any time upon
reasonable notice.
8. Management of Masco Capital. From the date hereof, Masco shall have
the sole right to manage Masco Capital, make investment decisions and take all
other acts which it may deem necessary or appropriate and Masco shall have no
liability to Industries with respect to such management, investment decisions
or any other matter involving Masco Capital based on action or inaction of
Masco or recklessness, misfeasance, gross negligence or negligence of Masco or
of any of its officers, directors, employees, shareholders or agents in the
handling of Masco Capital's affairs; provided, however, that if Masco is
requested or required by one of the partnerships managing an Investment to make
a decision which may affect the value of such Investment, Masco will notify
Industries before it makes such decision.
9. Funding Commitments. Masco and Masco Capital hereby release
Industries from any and all current or future funding commitments of Masco
Capital which Industries may have or have had with respect to the Investments
or the partnerships holding the Investments or otherwise and Masco agrees to
hold Industries harmless from any loss occasioned by an attempt by any entity
to enforce any such funding commitment.
10. Termination and Distribution. (a) Notwithstanding anything in this
Agreement to the contrary, if the Oversight Committees of the Boards of
Directors of Masco and Industries jointly determine that it is inappropriate to
pay all or part of the Incremental Value based on the Valuation as of September
30, 1994, or if they otherwise jointly determine to defer such Valuation or
payment, then such Committees may in their sole discretion set such payment to
occur in whole or in part after a Valuation on September 30, 1995 or September
30, 1996 and pay only such portion of the Incremental Value prior to December
31, 1994 as
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such Committees shall jointly determine. In such case all references to
September 30, 1994 in Section 4 or Section 5 hereof will be deemed to refer to
such later valuation date.
(b) Notwithstanding anything in this Agreement to the contrary, the
Oversight Committees of the Boards of Directors of Masco and Industries, acting
jointly, may determine following the liquidation of one or more Investments
that it is appropriate for Masco to make a cash payment to Industries prior to
December 31, 1994 (or December 31, 1995 or 1996 as the case may be) as an
advance against amounts that such Committees believe may subsequently be due to
Industries hereunder. Such advances may be made on such terms (including a
requirement that Industries agree to repay such advance if, after sale,
liquidation or otherwise turning into cash of all Investments, the advance was
not warranted) as such Committees may establish.
11. Liquidation of Masco Capital. Nothing in this Agreement shall
preclude Masco from reorganizing, merging, combining or liquidating and winding
up Masco Capital; provided, however, in the event of such a transaction or
series of transactions Masco shall keep separate accounts to enable it to
satisfy its obligations hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
MASCO CORPORATION
By /s/ Richard A. Manoogian
--------------------------
MASCO INDUSTRIES, INC.
By /s/ Timothy Wadhams
--------------------------
Masco Capital Corporation accepts and agrees to the provisions of this
Agreement relating to it.
MASCO CAPITAL CORPORATION
By /s/ John R. Leekley
--------------------------
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<PAGE> 1
EXHIBIT 10x
- -------------------------------------------------------------------------------
BRIDGE CREDIT AGREEMENT
dated as of January 3, 1997
Among
MSX INTERNATIONAL, INC.,
CITICORP VENTURE CAPITAL, LTD.
and
MASCOTECH, INC.,
as Bridge Lenders
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.01 Defined Terms . . . . . . . . . . . . . . . . . . 2
SECTION 1.02 Terms Generally . . . . . . . . . . . . . . . . . 17
ARTICLE II
The Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.01 Commitments . . . . . . . . . . . . . . . . . . . 17
SECTION 2.02 Loans . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.03 Borrowing Procedure . . . . . . . . . . . . . . . 18
SECTION 2.04 Evidence of Debt, Repayment of Loans . . . . . . 19
SECTION 2.05 Fees . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.06 Interest on Loans . . . . . . . . . . . . . . . . 20
SECTION 2.07 Default Interest . . . . . . . . . . . . . . . . 20
SECTION 2.08 Termination and Reduction of Commitments . . . . 20
SECTION 2.09 Repayment of Term Borrowings . . . . . . . . . . 21
SECTION 2.10 Optional Prepayment . . . . . . . . . . . . . . . 21
SECTION 2.11 Mandatory Prepayments . . . . . . . . . . . . . . 22
SECTION 2.12 Pro Rata Treatment . . . . . . . . . . . . . . . 23
SECTION 2.13 Sharing of Setoffs . . . . . . . . . . . . . . . 23
SECTION 2.14 Payments . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.15 Additional Credit Exposure . . . . . . . . . . . 24
ARTICLE III
Representations and Warranties . . . . . . . . . . . . . . . . . . 26
SECTION 3.01 Organization; Powers . . . . . . . . . . . . . . 26
SECTION 3.02 Authorization . . . . . . . . . . . . . . . . . . 26
SECTION 3.03 Enforceability . . . . . . . . . . . . . . . . . 26
SECTION 3.04 Governmental Approvals . . . . . . . . . . . . . 27
SECTION 3.05 No Material Adverse Change . . . . . . . . . . . 27
SECTION 3.06 Title to Properties; Possession Under Leases . . 27
SECTION 3.07 Subsidiaries . . . . . . . . . . . . . . . . . . 27
SECTION 3.08 Litigation; Compliance with Laws . . . . . . . . 28
SECTION 3.09 Use of Proceeds . . . . . . . . . . . . . . . . . 28
SECTION 3.10 Tax Returns . . . . . . . . . . . . . . . . . . . 28
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SECTION 3.11 No Material Misstatements . . . . . . . . . . . . 28
SECTION 3.12 Employee Benefit Plans . . . . . . . . . . . . . 29
SECTION 3.13 Environmental Matters . . . . . . . . . . . . . . 29
SECTION 3.14 Insurance . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.15 Security Documents . . . . . . . . . . . . . . . 30
SECTION 3.16 Location of Real Property and Leased Premises . . 30
SECTION 3.17 Labor Matters . . . . . . . . . . . . . . . . . . 30
ARTICLE IV
Conditions of Lending . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.01 All Credit Events . . . . . . . . . . . . . . . . 31
SECTION 4.02 First Credit Event . . . . . . . . . . . . . . . 32
ARTICLE V
Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.01 Existence; Business and Properties;
Compliance with Laws . . . . . . . . . . . . . . 34
SECTION 5.02 Insurance . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.03 Obligations and Taxes . . . . . . . . . . . . . . 35
SECTION 5.04 Financial Statements, Reports, etc . . . . . . . 35
SECTION 5.05 Litigation and Other Notices . . . . . . . . . . 36
SECTION 5.06 Employee Benefits . . . . . . . . . . . . . . . . 37
SECTION 5.07 Maintaining Records; Access to Properties and
Inspections . . . . . . . . . . . . . . . . . . . 37
SECTION 5.08 Use of Proceeds . . . . . . . . . . . . . . . . . 37
SECTION 5.09 Compliance with Environmental Laws . . . . . . . 37
SECTION 5.10 Further Assurances . . . . . . . . . . . . . . . 38
ARTICLE VI
Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.01 Indebtedness . . . . . . . . . . . . . . . . . . 38
SECTION 6.02 Liens . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.03 Intentionally Omitted. . . . . . . . . . . . . . 42
SECTION 6.04 Investments, Loans and Advances . . . . . . . . . 42
SECTION 6.05 Mergers, Consolidations and Sales of Assets . . . 43
SECTION 6.06 Dividends and Distributions; Restrictions
on Ability of Subsidiaries to Pay Dividends . . . 44
SECTION 6.07 Transactions with Affiliates . . . . . . . . . . 46
SECTION 6.08 Other Indebtedness and Agreements . . . . . . . . 46
SECTION 6.09 Minimum EBITDA . . . . . . . . . . . . . . . . . 47
SECTION 6.10 Fixed Charge Coverage Ratio . . . . . . . . . . . 47
SECTION 6.11 Net Worth . . . . . . . . . . . . . . . . . . . . 47
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SECTION 6.12 Capital Expenditures . . . . . . . . . . . . . . 48
SECTION 6.13 Business of the Borrower and Subsidiaries . . . . 48
ARTICLE VII
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VIII
The Administrative Agent and the Collateral Agent. . . . . . . . . 51
ARTICLE IXMiscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.01 Notices . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.02 Survival of Agreement . . . . . . . . . . . . . . 54
SECTION 9.03 Binding Effect . . . . . . . . . . . . . . . . . 54
SECTION 9.04 Successors and Assigns . . . . . . . . . . . . . 54
SECTION 9.05 Expenses; Indemnity . . . . . . . . . . . . . . . 55
SECTION 9.06 Applicable Law . . . . . . . . . . . . . . . . . 56
SECTION 9.07 Waivers; Amendment . . . . . . . . . . . . . . . 56
SECTION 9.08 Interest Rate Limitation . . . . . . . . . . . . 57
SECTION 9.09 Entire Agreement . . . . . . . . . . . . . . . . 57
SECTION 9.10 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . 57
SECTION 9.11 Severability . . . . . . . . . . . . . . . . . . 57
SECTION 9.12 Counterparts . . . . . . . . . . . . . . . . . . 58
SECTION 9.13 Headings . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.14 Consent to Service of Process . . . . . . . . . . 58
SECTION 9.15 Confidentiality . . . . . . . . . . . . . . . . . 58
SCHEDULES AND EXHIBITS
SCHEDULE I Subsidiary Guarantors
SCHEDULE II U.K. Credit Facilities
SCHEDULE 2.01 Commitments
SCHEDULE 2.15 Designated Guarantee Obligations and Letters of Credit
SCHEDULE 3.06 Exceptions to Performance
SCHEDULE 3.07 Ownership of Subsidiaries
SCHEDULE 3.08 Litigation
SCHEDULE 3.13 Environmental Matters
SCHEDULE 3.16 Real Property
SCHEDULE 3.17 Employment Matters
SCHEDULE 6.01 Indebtedness
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SCHEDULE 6.02 Liens
EXHIBIT A Form of Borrowing Request
EXHIBIT B Pledge Agreement
EXHIBIT C Security Agreement
EXHIBIT D Subsidiary Guarantee Agreement
EXHIBIT E Senior Subordinated Note
EXHIBIT F Form of Assignment and Acceptance
EXHIBIT G Administrative Questionnaire
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<PAGE> 6
BRIDGE CREDIT AGREEMENT dated as of January 3, 1997, among MSX
INTERNATIONAL, INC., a Delaware corporation (the "Borrower"); CITICORP VENTURE
CAPITAL, LTD., a New York corporation ("CVC") MASCOTECH, INC., a Delaware
corporation ("MascoTech"; and, collectively with CVC and their respective
permitted assignees, the "Bridge Lenders"); and a Bridge Lender or a bank or
other financial institution, in each case designated by the Bridge Lenders and
made a party hereto (in such capacity, the "Administrative Agent") and as
collateral agent (in such capacity, the "Collateral Agent") for the Bridge
Lenders.
Pursuant to the Acquisition Agreement dated as of November 12, 1996,
as amended (the "Acquisition Agreement"), among the Borrower, MascoTech and MSX
International, Inc., a Michigan corporation ("MSX"), the Borrower will acquire
from MascoTech and MSX, as applicable, directly and through certain
Subsidiaries, the Business (other than certain excluded assets), the APX
Continuing Business, the Limited Stock and the APX- Brazil Stock (as such terms
are defined in the Acquisition Agreement) (collectively, the "Acquisition"), all
for aggregate consideration of approximately $144,628,000, and also consisting
of the assumption by the Borrower and certain Subsidiaries of certain assumed
liabilities related to the Business and the APX Continuing Business.
In connection with the Acquisition, CVC and MascoTech, together with
members of management, will make a cash capital contribution to the Borrower in
an aggregate amount of approximately $40 million (the "Equity Contribution").
The Borrower has requested the Bridge Lenders to extend credit in the
form of (a) bridge term loans on the Closing Date, in an aggregate principal
amount of $40,000,000, and (b) bridge revolving loans at any time and from time
to time prior to the Final Maturity Date, in an aggregate principal amount at
any time outstanding not in excess of $60,000,000. The Borrower has requested
MascoTech to arrange for or guarantee the issuance of letters of credit and
other credit facilities to support payment obligations incurred in the ordinary
course of business by the Borrower and the Subsidiaries.
The proceeds of the Term Loans are to be used, together with a portion
of the proceeds of Revolving Loans to be made on the Closing Date, solely (a) to
pay the cash consideration to be paid in connection with the Acquisition and (b)
to pay related fees and expenses. The proceeds of the Revolving Loans (other
than the Revolving Loans used for the purposes specified in the immediately
preceding sentence) are to be used for working capital and other general
corporate purposes of the Borrower and the Subsidiaries.
The Bridge Lenders are willing to extend such credit to the Borrower
on the terms and subject to the conditions set forth herein. Accordingly, the
parties hereto agree as follows:
<PAGE> 7
ARTICLE I
Definitions
SECTION 1.1 Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"Additional Credit Disbursement" shall mean a payment or disbursement
made by any Bridge Lender in connection with a Designated Letter of Credit or
Designated Guarantee Obligation.
"Additional Credit Event" shall mean the incurrence by MascoTech of
any Guarantee obligation or Indebtedness in respect of (a) any Designated Letter
of Credit or (b) any Designated Guarantee Obligation.
"Additional Credit Exposure" shall mean at any time the sum of (a) the
aggregate undrawn amount of all outstanding Designated Letters of Credit at such
time plus (b) the aggregate amount of all Additional Credit Disbursements that
have not yet been reimbursed at such time plus (c) the aggregate outstanding
commitment amount of the U.K. Credit Facility (without duplication of Additional
Credit Disbursements related thereto). The Additional Credit Exposure of any
Bridge Lender at any time shall mean its Pro Rata Percentage of the aggregate
Additional Credit Exposure at such time; provided that (i) the face amount of
Additional Credit Exposure in respect of Designated Letters of Credit shall not
exceed at any time $15,000,000 and (ii) the principal amount of Additional
Credit Exposure in respect of Designated Guarantee Obligations shall not exceed
at any time Pounds 5,000,000.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount
of the Bridge Lenders' Revolving Credit Exposures.
"Amount of Eligible Receivables" shall mean and include at any time,
without duplication, the amount of Eligible Receivables set forth on the most
recent financial statements of the Borrower and the Subsidiaries delivered to
the Bridge Lenders pursuant to Section 5.04(e).
"Asset Sale" shall mean the sale, transfer or other disposition (by
way of merger or otherwise) by any Loan Party or any of the Subsidiaries to any
person other than any Loan Party of (a) any Capital Stock of any of the
Subsidiaries or (b) any other assets of any Loan Party or any of the
Subsidiaries, provided that none of (i) any asset sale or series of related
asset sales described in clause (b) above for consideration, at fair market
value, of less than $250,000, (ii) any Equity Issuance (without giving effect to
the exceptions set forth in such defined term) or (iii) any sale,
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<PAGE> 8
transfer or other disposition of assets pursuant to Section 6.05(a), (b), (c),
(d) or (e) shall be deemed an "Asset Sale", for purposes of this Agreement.
"Assignment and Acceptance" shall have the meaning assigned to it in
Section 9.04(b) hereof.
"Associate" shall mean, with respect to any person, (i) any trust or
other estate in which such person has a substantial beneficial interest or as to
which such person serves as trustee or in a similar fiduciary capacity and (ii)
any relative or spouse of such person, or any relative of such spouse, who has
the same home as such person.
"Availability" shall mean at any time (i) the lesser at such time of
(x) the Revolving Credit Commitment and (y) the Borrowing Base, minus (ii) the
sum at such time of (u) the unpaid principal balance of the Revolving Loans, (v)
the Additional Credit Exposure and (w) the unpaid principal balance of any NBD
Revolving Loans.
"Borrowing" shall mean a group of Loans made by the Bridge Lenders on
a single date.
"Borrowing Base" shall have the meaning assigned to such term in
Section 2.01(b) hereof.
"Borrowing Request" shall mean a request by the Borrower in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit A.
"Bridge Lenders" shall have the meaning assigned to such term in the
Recitals.
"Business Day" shall mean any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close.
"Capital Expenditures" shall mean, for any period, without
duplication, the aggregate of all expenditures (whether paid in cash or other
consideration) by the Borrower and its consolidated Subsidiaries during such
period that, in accordance with GAAP, are or should be included in "additions to
property, plant or equipment" or similar items reflected in the consolidated
statement of cash flows of the Borrower and the Subsidiaries for such period.
"Capital Lease Obligations" of any person shall mean an obligation of
such person that is required to be classified and accounted for as a capital
lease for financial reporting purposes in accordance with GAAP, and the amount
of such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
"Capital Stock" shall mean, with respect to any person, any and all
shares, interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however
3
<PAGE> 9
designated) equity of such person, including any preferred stock, any limited
or general partnership interest and any limited liability company membership
interest, but excluding any debt securities convertible into such equity.
"Cash Interest Expense" shall mean, for any period, the Interest
Expense of the Borrower and the Subsidiaries for such period less all non- cash
items constituting Interest Expense during such period, all calculated on a
consolidated basis in accordance with GAAP.
"Charges" shall have the meaning given to it in Section 9.08.
"Closing Date" shall mean the date of the first Credit Event.
"Closing Date Net Worth" shall mean Consolidated Net Worth as of the
Closing Date.
"Code" shall mean the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder, as amended from time to time.
"Collateral" shall mean all the "Collateral" as defined in any
Security Document.
"Commitment" shall mean, with respect to any Bridge Lender, such
Bridge Lender's Revolving Credit Commitment and/or Term Loan Commitment.
"Consolidated EBITDA" shall mean, for any period, the Consolidated Net
Income for such period, plus, without duplication, to the extent deducted in
computing Consolidated Net Income, the sum of (a) income tax expense, (b)
Interest Expense, (c) depreciation and amortization expense and (d) any
extraordinary losses, minus, without duplication, to the extent added in
computing such Consolidated Net Income, (i) any interest income and (ii) any
extraordinary gains, all as determined on a consolidated basis with respect to
the Borrower and the Subsidiaries in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period, net income or
loss of the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, subject to all applicable purchase
accounting adjustments.
"Consolidated Net Worth" shall mean, as at any date of determination,
the consolidated stockholders' equity of the Borrower and the Subsidiaries, as
determined on a consolidated basis in accordance with GAAP.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
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<PAGE> 10
"Credit Event" shall have the meaning assigned to such term in Section
4.01.
"CVC" shall have the meaning assigned to such term in the Recitals.
"Debentures" shall mean any junior subordinated debentures issued or
issuable by the Borrower in exchange for shares of Series A Preferred Stock of
the Borrower on the terms and subject to the conditions set forth in the
Certificate of Incorporation of the Borrower or in payment of interest on such
debentures.
"Default" shall mean any event or condition that upon notice, lapse of
time or both would constitute an Event of Default.
"Designated Guarantee Obligations" shall mean the Guarantee
obligations, not to exceed L.5,000,000 in principal amount, of MascoTech (in
which the other Bridge Lenders shall have a participation hereunder) in respect
of the U.K. Credit Facilities.
"Designated Letter of Credit" shall mean standby and trade letters of
credit described on Schedule 2.15 hereto and additional standby and trade
letters of credit issued after the Closing Date of a nature substantially
similar to those described on Schedule 2.15 the reimbursement obligations of
which are Guaranteed by MascoTech (and in which the other Bridge Lenders shall
have a participation hereunder).
"Disqualified Stock" shall mean, with respect to any person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable or exercisable) or upon the
happening of any event (i) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock or (iii) is redeemable at the option of the
holder thereof, in whole or in part, in each case on or prior to 366 days after
the Final Maturity Date.
"dollars" or "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiary" shall mean any Subsidiary incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
"Eligible Receivables" shall mean Receivables created by the Borrower
and the Subsidiaries in the ordinary course of business arising out of the sale
of goods or rendition of services by the Borrower and the Subsidiaries, which
are and at all times shall continue to be acceptable to each of the Bridge
Lenders in all respects. Standards of eligibility may be fixed and revised form
time to time solely by the Bridge Lenders.
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
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<PAGE> 11
"Environmental Claim" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
person for damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), Remedial Action costs, property damage, natural
resource damages, nuisance, pollution, any adverse effect on the environment
caused by any Hazardous Material, or for fines, penalties or restrictions,
resulting from or based upon (a) the existence, or the continuation of the
existence, of a Release (including sudden or non-sudden, accidental or
non-accidental Releases), (b) exposure to any Hazardous Material, (c) the
presence, use, handling, transportation, storage, treatment or disposal of any
Hazardous Material or (d) the violation or alleged violation of any
Environmental Law or Environmental Permit.
"Environmental Law" shall mean any and all applicable present and
future treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and safety
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. Section Section 9601 et seq.
(collectively "CERCLA"), the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. Section Section 6901 et seq., the Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C.
Section Section 1251 et seq., the Clean Air Act of 1970, as amended 42 U.S.C.
Section Section 7401 et seq., the Toxic Substances Control Act of 1976, 15
U.S.C. Section Section 2601 et seq., the Occupational Safety and Health Act of
1970, as amended, 29 U.S.C. Section Section 651 et seq., the Emergency Planning
and Community Right-to-Know Act of 1986, 42 U.S.C. Section Section 11001 et
seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. Section Section
300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section
Section 5101 et seq., and any similar or implementing state or local law, and
all amendments or regulations promulgated under any of the foregoing.
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, variance or filing required by or from any Governmental
Authority pursuant to any Environmental Law.
"Equity Contribution" shall have the meaning assigned to such term in
the Recitals.
"Equity Issuance" shall mean any issuance or sale by the Borrower of
any shares of Capital Stock of the Borrower, except for (a) any issuance or sale
to the Borrower or any Subsidiary, (b) sales or issuances of Capital Stock to
management, directors or key employees of the Borrower or any Subsidiary under
any stock option, stock purchase, stock grant or other similar incentive or
employee benefit plan in existence from time to time or (c) issuances of Capital
Stock by the Borrower upon the conversion, exercise or exchange of any class or
series of the Borrower's Capital Stock pursuant to the terms thereof as set
forth in the Certificate of Incorporation of the Borrower as the same may be in
effect at such time.
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<PAGE> 12
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
and the rules and regulations promulgated thereunder, as the same may be amended
from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with any Loan Party, is treated as a single
employer under Section 414(b) or (c) of the Code, or solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the incurrence of any liability under
Title IV of ERISA with respect to the termination of any Plan or the withdrawal
or partial withdrawal of any Loan Party or any of its ERISA Affiliates from any
Plan or Multiemployer Plan; (f) the receipt by any Loan Party or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (g) the receipt by any Loan Party or any ERISA Affiliate of any notice
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; (h) the occurrence of a "prohibited
transaction" with respect to which any Loan Party or any of its Subsidiaries is
a "disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which any Loan Party or any such Subsidiary could otherwise be
liable; and (i) any other event or condition with respect to a Plan or
Multiemployer Plan or any plan subject to Title IV of ERISA maintained, or
contributed to, by any ERISA Affiliate that could reasonably be expected to
result in liability of any Loan Party.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Excess Cash Flow" shall mean, for any fiscal year, Consolidated
EBITDA of the Borrower and the Subsidiaries on a consolidated basis for such
fiscal year, minus, without duplication, (a) Cash Interest Expense paid during
such fiscal year, (b) scheduled principal repayments of Indebtedness made by the
Borrower and the Subsidiaries on a consolidated basis during such year, (c)
voluntary prepayments of Term Loans during such fiscal year, (d) permitted
Capital Expenditures by the Borrower and the Subsidiaries on a consolidated
basis during such fiscal year that are paid in cash and (e) cash tax liability
of the Borrower and the Subsidiaries on a consolidated basis during such fiscal
year.
"Fees" shall mean the Administrative Agent Fees.
"Final Maturity Date" shall mean December 31, 2002.
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<PAGE> 13
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer, treasurer or controller of such
corporation.
"Fixed Charge Coverage Ratio" at the end of any period shall mean the
ratio of (i) Consolidated EBITDA divided by (ii) the sum of, without
duplication, (a) Cash Interest Expense plus (b) scheduled payments of principal
with respect to all Indebtedness (including scheduled payment of Capital Lease
Obligations) plus (c) Capital Expenditures, in each case for the Borrower and
the Subsidiaries calculated on a consolidated basis in accordance with GAAP for
such period.
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" shall mean generally accepted accounting principles applied on
a consistent basis for all periods after the date hereof. All accounting terms
shall be interpreted and all accounting determinations hereunder shall be made
in accordance with Section 1.02.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantee" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; provided, however, that the
term "Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Guarantee of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
is made and (b) the maximum amount for which such guaranteeing person may be
liable pursuant to the terms of the instrument embodying such Guarantee, unless
such primary obligation and the maximum amount for which such guaranteeing
person may be liable are not stated or determinable, in which case the amount of
such Guarantee shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes, pollutants,
solid, liquid or gaseous wastes, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, radon gas and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.
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<PAGE> 14
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money, (b) all obligations of such
person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such person under conditional sale or other title retention
agreements relating to property or assets purchased by such person, (d) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding trade accounts payable and accrued obligations
incurred in the ordinary course of business), (e) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed; provided, however, that the amount of Indebtedness of such person
shall be the lesser of (i) the fair market value of such asset at such date of
determination and (ii) the amount of such Indebtedness, (f) all Guarantees by
such person of Indebtedness of others, (g) all Capital Lease Obligations of such
person, (h) all obligations of such person in respect of interest rate
protection agreements, foreign currency exchange agreements or other interest or
exchange rate hedging arrangements and (i) all obligations of such person as an
account party in respect of letters of credit and bankers' acceptances. The
Indebtedness of any person shall include the Indebtedness of any partnership in
which such person is a general partner, other than to the extent that the
instrument or agreement evidencing such Indebtedness expressly limits the
liability of such person in respect thereof.
"Indemnitee" shall have the meaning given such term in Section
9.05(b).
"Information" shall have the meaning given to it in Section 9.15.
"Interest Expense" shall mean, for any period, the interest expense of
the Borrower during such period determined on a consolidated basis in accordance
with GAAP.
"Interest Payment Date" shall mean, with respect to any Loan, the last
day of each June and December and at maturity.
"Joint Venture" shall mean any person of which securities or other
ownership interests representing at least 20% but no greater than 50% of the
equity or ordinary voting power are owned, controlled or held by the Borrower or
any of its Subsidiaries.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, encumbrance, charge or security interest (or agreement
to give a security interest) in or on such asset and (b) the interest of a
vendor or a lessor under any conditional sale agreement, lease or title
retention agreement relating to such asset.
"Loan Documents" shall mean this Agreement, the Senior Subordinated
Note, the Subsidiary Guarantee Agreement and the Security Documents.
"Loan Parties" shall mean the Borrower and the Subsidiary Guarantors.
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<PAGE> 15
"Loan Rate" shall mean, for any day, a rate per annum equal to (a)
10.0% through June 30, 1997, (b) thereafter, 11.0% through September 30, 1997,
(c) thereafter, 12.0% through December 31, 1997 and (d) thereafter, 13.0%.
"Loans" shall mean the Revolving Loans and the Term Loans.
"Management Investors" shall mean any officers, directors or employees
of the Borrower or its Subsidiaries who acquire Capital Stock of the Borrower on
or after the Closing Date and any of their direct or indirect Permitted
Transferees.
"MascoTech" shall have the meaning assigned to such term in the
Recitals.
"Material Adverse Effect" shall mean (a) a materially adverse effect
on the business, assets, operations, properties or financial condition of the
Borrower and its consolidated Subsidiaries, taken as a whole, or (b) material
impairment of the rights of or remedies available to the Bridge Lenders under
any Loan Document.
"Maximum Rate" shall have the meaning given to it in Section 9.08.
"Moody's" shall mean Moody's Investors Service, Inc. and its
successors.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which any Loan Party is obligated to contribute.
"NBD Revolving Loans" means the revolving or line of credit loans
owing by the Borrower under the $60,000,000 revolving line of credit entered
into by the Borrower on the Closing Date with NBD Bank, and any such loans made
pursuant to any renewal, refinancing or replacement of such facility.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale, the
cash proceeds thereof (including deferred cash payments as and when received
(collectively, "Deferred Cash")) net of (i) costs of sale (including payment of
the outstanding principal amount of, premium or penalty, if any, interest and
other amounts on any Indebtedness (other than Loans) required to be repaid under
the terms thereof or by applicable law as a result of such Asset Sale), (ii)
taxes paid or payable in the year such Asset Sale occurs or in the following
year as a result thereof, (iii) amounts (A) provided as a reserve, in accordance
with GAAP, against any liabilities under any indemnification obligations
associated with such Asset Sale or (B) held in escrow pursuant to an agreement
relating to such Asset Sale (provided that, to the extent and at the time any
such amounts are released from such reserve or escrow, such amounts shall
constitute Net Cash Proceeds (net of any taxes paid or payable)) and (iv)
payments to holders of minority interests in the asset subject to such Asset
Sale or in the entity selling the asset and (b) with respect to any Equity
Issuance or any issuance or other disposition of Indebtedness for borrowed
money, the cash proceeds thereof (including Deferred Cash) net of underwriting
discounts and commissions or placement fees,
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<PAGE> 16
attorneys' fees, accountants' fees, filing and registration fees, trustee fees
and other fees and expenses directly incurred in connection therewith net of
any taxes paid or payable as a result thereof.
"90%-Owned Foreign Subsidiary" shall mean a Foreign Subsidiary of
which securities (except for directors' qualifying shares) or other ownership
interests representing at least 90% of the equity or at least 90% of the
ordinary voting power are, at the time any determination is being made, owned,
controlled or held by the Borrower or any wholly owned subsidiary.
"Obligations" shall mean (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower in respect of any Letter of Credit, when and as due,
including payments in respect of reimbursement of disbursements, interest
thereon and obligations to provide cash collateral and (iii) fees, costs,
expenses and indemnities, (including monetary obligations incurred during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Loan Parties to the Secured Parties under this Agreement and the other Loan
Documents, and (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Loan Parties under or pursuant to
this Agreement or the other Loan Documents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"Perfection Certificate" shall mean the Perfection Certificate
substantially in the form of Annex I to the Security Agreement.
"Permitted Foreign Indebtedness" shall mean, without duplication,
Indebtedness under U.K. Credit Facility in an aggregate principal amount not to
exceed L.5,000,000 and unsecured Indebtedness of MascoTech Engineering Gmblt in
an aggregate principal amount not to exceed DM1,500,000.
"Permitted Foreign Investments" shall mean (a) any investments in, or
loans or advances to, any Foreign Subsidiary by the Borrower or any Domestic
Subsidiary or (b) any letters of credit or Guarantees to support Permitted
Foreign Indebtedness issued by or for the account of the Borrower or any
Domestic Subsidiary. For purposes of determining the amount of any Permitted
Foreign Investment outstanding at any time, (i) the amount of any investment,
loan or advance made pursuant to clause (a) above shall equal the aggregate
amount of the consideration (whether in cash or property, valued at the time
each such investment, loan or advance is made) paid for such investment, loan or
advance (net of any return of capital or principal of (but not dividends or
interest
11
<PAGE> 17
on) such investment, loan or advance) and (ii) the amount of any Permitted
Foreign Investment pursuant to clause (b) above shall be the face amount of any
such letter of credit or Guarantee.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from S&P or from Moody's;
(c) investments in (i) certificates of deposit, banker's acceptances
and time deposits maturity within one year from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof that has a combined
capital and surplus profits of not less than $250,000,000 or (ii) Eurocurrency
time deposits maturing within 360 days from the date of acquisition thereof with
any branch or office of (A) any commercial bank organized under the laws of a
country that is a member of the Organization for Economic Cooperation and
Development, and comparable in credit quality to the investments permitted under
the preceding clause (i), or (B) any Bridge Lender;
(d) repurchase obligations with a term of not more than 30 days for,
and secured by, underlying securities of the types described in clause (a) above
entered into with a bank meeting the qualifications described in clause (c)
above;
(e) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or "A-1"
by Moody's;
(f) investments in money market funds complying with the risk limiting
conditions of Rule 2a-7 (or any successor rule) of the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended;
(g) in the case of any Foreign Subsidiary, investments comparable in
credit quality and tenor to those referred to above and customarily used by
corporations for cash management purposes in any jurisdiction outside the United
States of America; and
(h) other investment instruments approved in writing by the Required
Bridge Lenders.
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<PAGE> 18
"Permitted Transferee" shall have the meaning assigned to such term in
the Stockholders' Agreement.
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which any Loan Party
is (or, if such plan were terminated, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" shall mean the Pledge Agreement, substantially in
the form of Exhibit B, among the Borrower, the Subsidiaries party thereto and
the Collateral Agent for the benefit of the Secured Parties.
"Prime Rate" shall mean for any applicable day, the rate of interest
from time to time announced by Chemical Bank at its principal office located in
New York, New York as its prime commercial lending rate as publicly announced
from time to time. Each change in any interest rate provided for herein based
upon the Prime Rate resulting from a change in the Prime Rate shall take effect
at the time of such change in the Prime Rate.
"Properties" shall have the meaning given such term in Section 3.13.
"Pro Rata Percentage" of any Revolving Credit Lender at any time shall
mean the percentage of the Total Revolving Credit Commitment represented by such
Bridge Lender's Revolving Credit Commitment.
"Receivables" shall mean and include all of the Borrower's and the
Subsidiaries' accounts, instruments, documents, chattel paper and general
intangibles, whether secured or unsecured, whether now existing or hereafter
created or arising, and whether or not specifically assigned to the Collateral
Agent for the ratable benefit of the Bridge Lenders.
"Refinancing Indebtedness" shall have the meaning given such term is
Section 6.01(1).
"Register" shall have the meaning given such term in Section 9.04(c).
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing, depositing, dispersing, emanating or migrating of any Hazardous
Material in, into, onto or through the environment.
"Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental
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<PAGE> 19
Authority or voluntarily undertaken to: (i) cleanup, remove, treat, abate or in
any other way address any Hazardous Material in the environment; (ii) prevent
the Release or threat of Release, or minimize the further Release of any
Hazardous Material so it does not migrate or endanger or threaten to endanger
public health, welfare or the environment; or (iii) perform studies and
investigations in connection with, or as a precondition to, (i) or (ii) above.
"Required Bridge Lenders" shall mean, at any time, each of the Bridge
Lenders.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each Bridge
Lender, the commitment of such Bridge Lender to make Revolving Loans hereunder
and Guarantee and Indebtedness obligations (including through participations
under this Agreement) in respect of (a) Designated Letters of Credit and (b)
Designated Guarantee Obligations in an aggregate amount at any time outstanding
not in excess of the amount opposite the name of such Bridge Lender in the
column entitled "Revolving Credit Commitment" in the table appearing in Schedule
2.01, or the amount in the Assignment and Acceptance pursuant to which such
Bridge Lender assumed its Revolving Credit Commitment, as applicable, as such
amount may be (a) reduced from time to time pursuant to Section 2.08 and (b)
reduced or increased from time to time pursuant to assignments by or to such
Bridge Lender pursuant to Section 9.04.
"Revolving Credit Exposure" shall mean, with respect to any Revolving
Credit Lender at any time, the aggregate principal amount at such time of all
outstanding Revolving Loans made by such Bridge Lender, plus the aggregate
amount at such time of such Bridge Lender's Additional Credit Exposure.
"Revolving Credit Lender" shall mean a Bridge Lender with a Revolving
Credit Commitment.
"Revolving Credit Note" means a note issued by the Borrower in
connection with a Revolving Loan.
"Revolving Loans" shall mean the loans made or deemed made by the
Bridge Lenders to the Borrower pursuant to clause (b) of Section 2.01.
"S&P" shall mean Standard and Poor's Ratings Group, a division of
McGraw-Hill, Inc., and its successors.
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<PAGE> 20
"Secured Parties" shall have the meaning assigned to such term in the
Security Agreement.
"Security Agreement" shall mean the Security Agreement, substantially
in the form of Exhibit C, among the Borrower and the Subsidiaries party thereto
and the Collateral Agent for the benefit of the Secured Parties.
"Security Documents" shall mean the Security Agreement, the Pledge
Agreement and each of the security agreements, mortgages and other instruments
and documents executed and delivered pursuant to any of the foregoing or
pursuant to Section 5.10.
"Senior Subordinated Note" shall mean the Senior Subordinated Note due
2006 issued to MascoTech by the Borrower on the Closing Date in an aggregate
principal amount of not less than $30,000,000 and shall include any
substantially identical notes issued in the exchange therefor after the Closing
Date, pursuant to the agreement governing such notes.
"Stockholders' Agreement" shall mean the Stockholders' Agreement dated
as of the date hereof, among the Borrower, MascoTech, the Institutional Investor
and the Management Investors, as the same may be amended, supplemented or
otherwise renewed or replaced from time to time in accordance with the terms
thereof and hereof.
"subsidiary" shall mean, with respect to any person (herein referred
to as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held, or (b) that is, at the time any
determination is made, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent, provided that the term "subsidiary," when used in respect of the
Borrower or any of its subsidiaries, shall not include any foreign joint venture
in which the Borrower or any such subsidiary owns less than or equal to 50% of
the equity interest in such joint venture.
"Subsidiary" shall mean any subsidiary of the Borrower.
"Subsidiary Guarantee Agreement" shall mean the Subsidiary Guarantee
Agreement, substantially in the form of Exhibit D, made by the Subsidiary
Guarantors in favor of the Collateral Agent for the benefit of the Secured
Parties.
"Subsidiary Guarantor" shall mean each Subsidiary party to the
Subsidiary Guarantee Agreement.
"Term Loan Borrowing" shall mean a Borrowing comprised of Term Loans.
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<PAGE> 21
"Term Loan Borrowing" shall mean a Borrowing comprised of Term Loans.
"Term Loan Commitment" shall mean, with respect to each Bridge Lender,
the commitment of such Bridge Lender to make Term Loans hereunder in an
aggregate amount at any time outstanding not in excess of the amount opposite
the name of such Bridge Lender in the column entitled "Term Loan Commitment" in
the table appearing in Schedule 2.01 or the amount in the Assignment and
Acceptance pursuant to which such Bridge Lender assumed its Term Loan
Commitment, as applicable.
"Term Loan Repayment Amount" shall have the meaning assigned to such
term in Section 2.09(a)(i).
"Term Loan Repayment Date" shall have the meaning assigned to such
term in Section 2.09(a)(i).
"Term Note" means a note issued by the Borrower in connection with a
Term Loan.
"Term Loans" shall mean the loans made by the Bridge Lenders to the
Borrower pursuant to Section 2.01(a).
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate amount of the Revolving Credit Lenders' Revolving Credit Commitments,
as in effect at such time.
"Transactions" shall have the meaning assigned to such term in Section
3.02.
"U.K. Credit Facility" shall mean the credit facilities described in
Schedule I hereto.
"Upstream Payment" shall have the meaning assigned to such term in
Section 6.06(b).
"wholly owned subsidiary" of any person shall mean a subsidiary of
such person of which securities (except for directors' qualifying shares) or
other ownership interests representing 100% of the equity or 100% of the
ordinary voting power or 100% of the general partnership interests are, at the
time any determination is being made, owned, controlled or held by such person
or one or more wholly owned subsidiaries of such person or by such person and
one or more wholly owned subsidiaries of such person. The term "wholly owned",
when used to modify the term "Subsidiary" or "Domestic Subsidiary", shall have a
correlative meaning.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
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SECTION 1.02 Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include," "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time, (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that for purposes of determining compliance
with the covenants contained in Article VI or Section 2.11(d), all accounting
terms herein shall be interpreted and all accounting determinations hereunder
shall be made in accordance with GAAP as in effect on the date of this Agreement
and applied on a basis consistent with the application used in the financial
statements referred to in Section 3.05(a) and (c) all references herein to the
Borrower on an unconsolidated basis shall be deemed to exclude any investment by
the Borrower in any of its subsidiaries.
ARTICLE II
The Credits
SECTION 2.01 Commitments. Subject to the terms and conditions relying
upon the representations and warranties herein set forth, each Bridge Lender
agrees, severally and not jointly, (a) to make a Term Loan to the Borrower on
the Closing Date in a principal amount not to exceed its Term Loan Commitment
and (b) to make Revolving Loans (which shall be deemed to include unpaid or
unreimbursed Additional Credit Disbursements) to the Borrower, at any time and
from time to time on or after the date hereof, and until the earlier of the
Final Maturity Date and the termination of the Revolving Credit Commitment of
such Bridge Lender in accordance with the terms hereof, in an aggregate
principal amount at any time outstanding that will not result in (i) such Bridge
Lender's Revolving Credit Exposure exceeding (ii) such Bridge Lender's Revolving
Credit Commitment. Notwithstanding the foregoing, the aggregate principal
amount of Revolving Loans outstanding at any time to the Borrower shall not
exceed (1) the lesser of (A) the Total Revolving Credit Commitment (as such
amount may be reduced pursuant to Section 2.08 hereto) and (B) an amount equal
to up to eighty percent (80%) of the amount of Eligible Receivables, (this
clause (1) (B) referred to herein as the "Borrowing Base"), minus (2) the
Additional Credit Exposure at such time (excluding any unpaid or unreimbursed
Additional Credit Disbursements). Within the limits set forth in the two
immediately preceding sentences and subject to the terms, conditions and
limitations set forth herein, including, without limitation, the requirement
that no Revolving Loan shall be made hereunder if the amount thereof exceeds the
Availability outstanding at such time, the Borrower may borrow, pay or prepay
and reborrow Revolving Loans. Amounts paid or prepaid in respect of Term Loans
may not be reborrowed.
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SECTION 2.02 Loans.
(a) Each Loan shall be made as part of a Borrowing consisting of Loans
made by the Bridge Lenders ratably in accordance with their respective Term Loan
Commitments or Revolving Credit Commitments, as applicable; provided, however,
that the failure of any Bridge Lender to make any Loan shall not in itself
relieve any other Bridge Lender of its obligation to lend hereunder (it being
understood, however, that no Bridge Lender shall be responsible for the failure
of any other Bridge Lender to make any Loan required to be made by such other
Bridge Lender). The Loans comprising any Borrowing shall be in an aggregate
principal amount that is (i) not less than $5,000,000 and, in each case, in an
integral multiple of $1,000,000 or (ii) equal to the remaining available balance
of the applicable Commitment.
(b) Each Bridge Lender shall make each Loan to be made by it hereunder
on the proposed date thereof by wire transfer of immediately available funds to
such account in New York City as the Administrative Agent may designate not
later than 12:00 (noon), New York City time, and the Administrative Agent shall
by 1:00 p.m., New York City time, credit the amounts so received to an account
in the name of the Borrower, maintained with the Administrative Agent and
designated in the applicable Borrowing Request or, if a Borrowing shall not
occur on such date because any condition precedent herein specified shall not
have been met, return the amounts so received to the respective Bridge Lenders.
(c) If a Bridge Lender does not, prior to the date of any Borrowing,
make available to the Administrative Agent such Bridge Lender's portion of such
Borrowing, the Administrative Agent shall not be obligated to make available to
the Borrower on such date a corresponding amount.
SECTION 2.03 Borrowing Procedure. In order to request a Borrowing,
the Borrower shall notify the Administrative Agent by telephone of its intent to
request a Borrowing and shall hand deliver or telecopy to the Administrative
Agent a duly completed Borrowing Request not later than 11:00 a.m., New York
City time, five (5) Business Days before a proposed Borrowing. Each Borrowing
Request shall be irrevocable, shall be signed by or on behalf of the Borrower
and shall specify the following information: (i) whether the Borrowing then
being requested is to be a Term Borrowing or a Revolving Credit Borrowing; (ii)
the date of such Borrowing (which shall be a Business Day); (iii) the number and
location of the account to which funds are to be disbursed (which shall be an
account that complies with the requirements of Section 2.02(b)); and (iv) the
amount of such Borrowing; provided, however, that, notwithstanding any contrary
specification in any Borrowing Request, each requested Borrowing shall comply
with the requirements set forth in Section 2.02. The Administrative Agent shall
promptly advise the applicable Bridge Lenders of any notice given pursuant to
this Section 2.03 (and the contents thereof), and of each Bridge Lender's
portion of the requested Borrowing.
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SECTION 2.04 Evidence of Debt, Repayment of Loans.
(a) The Borrower unconditionally promises to pay to the Administrative
Agent for the account of each Bridge Lender (i) the principal amount of each
Term Loan of such Bridge Lender as provided in Section 2.11 and (ii) the then
unpaid principal amount of each Revolving Loan on the Final Maturity Date.
(b) On the date of any termination or reduction of the Revolving
Credit Commitment pursuant to Section 2.08(b) hereof or elsewhere in this
Agreement, the Borrower shall pay or prepay so much of the Revolving Loans as
shall be necessary in order that the Availability equals or exceeds zero
following such termination or reduction.
(c) The Borrower shall make prepayments of the Revolving Credit Loans
from time to time such that the Availability equals or exceeds zero at all
times.
(d) Each Bridge Lender shall maintain an account or accounts
evidencing the Indebtedness of the Borrower to such Bridge Lender resulting from
each Loan made by such Bridge Lender from time to time, including the amounts of
principal and interest payable and paid such Bridge Lender from time to time
under this Agreement.
(e) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Bridge Lender hereunder and (iii) the amount of any sum
received by the Administrative Agent hereunder from the Borrower or any
Subsidiary Guarantor and each Bridge Lender's share thereof. Notwithstanding
any other provision of this Agreement, it is understood and agreed that each
Loan made hereunder shall be deemed made for the account of the Borrower, and
the Administrative Agent and the Bridge Lenders shall not have any obligation to
maintain any accounts with respect to any Borrowing (or any portion thereof)
made by the Borrower.
(f) The entries made in the accounts maintained pursuant to paragraphs
(b) and (e) above shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, however, that the failure of any
Bridge Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with their terms.
(g) Notwithstanding any other provision of this Agreement, in the
event any Bridge Lender shall request and receive a promissory note payable to
such Bridge Lender and its permitted registered assigns, the interests
represented by such note shall at all times be represented by one or more
promissory notes payable to the payee named therein or its permitted registered
assigns.
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SECTION 2.05 Fees. (a) The Borrower agrees to pay to the
Administrative Agent, for its own account, the administration fee, as agreed to
by such parties, at the times and in the amounts specified therein (the
"Administrative Agent Fees").
(b) The Borrower agrees to pay to each Bridge Lender on each Interest
Payment Date a fee calculated on such Bridge Lender's Pro Rata Percentage of the
average daily Additional Credit Exposure (excluding the portion thereof
attributable to unpaid or unreimbursed Additional Credit Disbursements) during
the preceding two quarters (or applicable shorter period) at a rate per annum
equal to 1.25%, computed on the basis of actual number of days elapsed in a
360-day year.
(c) All of the above fees shall be paid on the dates due, in
immediately available funds, to the Administrative Agent and Bridge Lenders, as
applicable. Once paid, none of such fees shall be refundable under any
circumstances.
SECTION 2.06 Interest on Loans.
(a) Subject to the provisions of Section 2.07, the Loans shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 360 days) at a rate per annum equal to the Loan Rate in effect for such
Borrowing.
(b) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement.
The Loan Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.07 Default Interest. If the Borrower shall default in the payment of
the principal of, or interest on, any Loan or any other amount becoming due
hereunder, by acceleration or otherwise, or under any other Loan Document, the
Borrower agrees to pay on demand from time to time interest, to the extent
permitted by law, on such defaulted amount to but excluding the date of actual
payment (after as well as before judgment) at the rate otherwise applicable to
such Loan pursuant to Section 2.06 plus 2.00% per annum.
SECTION 2.08 Termination and Reduction of Commitments.
(a) The Term Loan Commitments shall automatically terminate at 5:00
p.m., New York City time, on the Closing Date. The Revolving Credit Commitments
shall automatically terminate on the Final Maturity Date.
(b) Upon at least three Business Days' prior irrevocable notice to the
Administrative Agent given by telephone (promptly confirmed by written or
telecopy notice), the Borrower may at any time in whole permanently terminate,
or from time to time in part permanently reduce the Revolving Credit
Commitments; provided, however, that (i) each partial reduction of the Revolving
Credit Commitments shall be in an integral multiple of $1,000,000 and in a
minimum
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amount of $2,000,000 and (ii) the Total Revolving Credit Commitment shall not
be reduced to an amount that is less than the Aggregate Revolving Credit
Exposure at the time.
(c) Each reduction in the Total Revolving Credit Commitment hereunder
shall be made ratably among the Revolving Credit Lenders in accordance with
their respective Revolving Credit Commitment.
SECTION 2.09 Repayment of Term Borrowings.
(a) The Borrower shall pay to the Administrative Agent, for the
account of the Bridge Lenders, on the dates set forth below, or if any such date
is not a Business Day, on the next succeeding Business Day (each such date being
a "Term Loan Repayment Date"), a principal amount of the Term Loans equal to the
amount set forth below for such date, as such amount may be adjusted from time
to time pursuant to Sections 2.09(b), 2.10 and 2.11 (such amount, as adjusted,
being called the "Term Loan Repayment Amount"), together in each case with
accrued and unpaid interest on the principal amount to be paid to but excluding
the date of such payment:
Date Amount
December 31, 1997 $5,000,000
December 31, 1998 5,000,000
December 31, 1999 6,000,000
December 31, 2000 7,000,000
December 31, 2001 8,000,000
December 31, 2002 9,000,000
(b) To the extent not previously paid, all Term Loans shall be due and
payable on the Final Maturity Date, together with accrued and unpaid interest on
the principal amount to be paid to but excluding the date of payment.
(c) All repayments pursuant to this Section 2.09 shall be subject to
Section 2.12, but shall otherwise be without premium or penalty.
SECTION 2.10 Optional Prepayment.
(a) The Borrower shall have the right at any time and from time to
time to prepay any Borrowing, in whole or in part, upon at least three Business
Days' prior notice to the Administrative Agent given by telephone (promptly
confirmed by written or telecopy notice) before 11:00 a.m., New York City time;
provided, however, that each partial prepayment shall be in an amount that is an
integral multiple of $1,000,000 and not less than $2,000,000.
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(b) Optional prepayments of Term Loans shall be allocated pro
rata between the then outstanding Term Loans and applied in the inverse order of
the remaining scheduled installments of principal due in respect of the Term
Loans under Section 2.09(a).
(c) Each notice of prepayment shall specify the prepayment date
and the principal amount of each Borrowing (or portion thereof) to be prepaid,
shall be irrevocable and shall commit the Borrower to prepay such Borrowings by
the amount stated therein on the date stated therein. All prepayments under
this Section 2.10 shall be subject to Section 2.12 but otherwise without premium
or penalty.
SECTION 2.11 Mandatory Prepayments.
(a) In the event of any termination of all the Revolving Credit
Commitments, the Borrower shall repay or prepay all its outstanding Revolving
Credit Borrowings on the date of such termination. In the event of any partial
reduction of the Revolving Credit Commitments, then (i) at or prior to the
effective date of such reduction, the Administrative Agent shall notify the
Borrower and the Revolving Credit Lenders of the Aggregate Revolving Credit
Exposure after giving effect thereto and (ii) if the Aggregate Revolving Credit
Exposure would exceed the Total Revolving Credit Commitment after giving effect
to such reduction or termination, then the Borrower shall, on the date of such
reduction or termination, repay or prepay Revolving Credit Borrowings in an
amount sufficient to eliminate such excess.
(b) Not later than the third Business Day following the receipt
of any Net Cash Proceeds from any Asset Sale, the Borrower shall apply 100% of
the Net Cash Proceeds received with respect thereto to prepay outstanding Term
Loans in accordance with Section 2.11(f).
(c) In the event and on each occasion that an Equity Issuance
occurs, the Borrower shall, substantially simultaneously with (and in any event
not later than the third Business Day next following) the occurrence of such
Equity Issuance, apply 100% of the Net Cash Proceeds therefrom to prepay
outstanding Term Loans in accordance with Section 2.11(f).
(d) No later than the earlier of (i) 90 days after the end of
each fiscal year of the Borrower commencing with the fiscal year ending on
December 31, 1997, and (ii) the date on which the financial statements with
respect to such fiscal year are delivered pursuant to Section 5.04(a), the
Borrower shall prepay outstanding Term Loans in accordance with Section 2.11(f)
in an aggregate principal amount equal to 75% of the Excess Cash Flow for such
fiscal year.
(e) In the event that the Borrower or any Subsidiary shall
receive Net Cash Proceeds from the issuance of Indebtedness for money borrowed
of the Borrower or any Subsidiary (other than Indebtedness for money borrowed
permitted pursuant to Section 6.01), the Borrower shall, substantially
simultaneously with (and in any event not later than the third Business Day next
following) the receipt of such Net Cash Proceeds by such Loan Party or such
Subsidiary, apply an
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amount equal to 100% of such Net Cash Proceeds to prepay outstanding Term Loans
in accordance with Section 2.11(f).
(f) Subject to paragraph (h) below, mandatory prepayments of
outstanding Term Loans under this Agreement shall be allocated pro rata between
the then outstanding Term Loans, and applied in the inverse order of the
remaining scheduled installments of principal due in respect of Term Loans under
Section 2.09(a).
(g) The Borrower shall deliver to the Administrative Agent, at
the time of each prepayment required under this Section 2.11, (i) a certificate
signed by a Financial Officer of the Borrower setting forth in reasonable detail
the calculation of the amount of such prepayment and (ii) to the extent
reasonably practicable, at least three days prior written notice of such
prepayment. Each notice of prepayment shall specify the prepayment date, the
principal amount of each Loan (or portion thereof) to be prepaid and the amount,
if any, to be deposited in the account or accounts designated by the Bridge
Lenders from time to time. All prepayments of Borrowings under this Section
2.11 shall be subject to Section 2.11(h) and Section 2.12, but shall otherwise
be without premium or penalty.
(h) Amounts to be applied pursuant to this Section 2.11 to the
prepayment of Term Loans and Revolving Loans shall be applied, as applicable,
first to reduce outstanding Term Loans. Any amounts remaining after each such
application shall, at the option of the Parent Borrower, be applied to repay
Revolving Loans immediately.
SECTION 2.12 Pro Rata Treatment. Each Borrowing, each payment or
prepayment of principal of any Borrowing, each payment of interest on the Loans,
and each reduction of the Revolving Credit Commitments shall be allocated pro
rata among the Bridge Lenders, in the case of principal and interest payments,
in accordance with their respective applicable outstanding Loans and, in the
case of all other payments, the Commitments (or, if such Commitments shall have
expired or been terminated, in accordance with the respective principal amounts
of their outstanding Loans). Each Bridge Lender agrees that in computing such
Bridge Lender's portion of any Borrowing to be made hereunder, the
Administrative Agent may, in its discretion, round each Bridge Lender's
percentage of such Borrowing to the next higher or lower whole dollar amount.
SECTION 2.13 Sharing of Setoffs. Each Bridge Lender agrees that
if it shall, through the exercise of a right of lien, setoff or counterclaim
against the Borrower or any other Loan Party, or pursuant to a secured claim
under Section 506 of Title 11 of the United States Code or other security or
interest arising from, or in lieu of, such secured claim, received by such
Bridge Lender under any applicable bankruptcy, insolvency or other similar law
or otherwise, or by any other means, obtain payment (voluntary or involuntary)
in respect of any Loan or Loans or Additional Credit Disbursement as a result of
which the unpaid principal portion of its Term Loans and Revolving Loans and
participations held by such Bridge Lender in Additional Credit Disbursements
shall be proportionately less than the unpaid principal portion of the Term
Loans and Revolving
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Loans and participations held by any other Bridge Lender, it shall be deemed
simultaneously to have purchased from such other Bridge Lender at face value,
and shall promptly pay to such other Bridge Lender the purchase price for, a
participation or interest in the Term Loans and Revolving Loans and
participations in Additional Credit Disbursements, as the case may be, of such
other Bridge Lender, so that the aggregate unpaid principal amount of the Term
Loans and Revolving Loans and participations in Additional Credit Disbursements
held by each Bridge Lender shall be in the same proportion to the aggregate
unpaid principal amount of all Term Loans and Revolving Loans and
participations in Additional Credit Disbursements then outstanding as the
principal amount of its Term Loans and Revolving Loans and interests in
Additional Credit Disbursements prior to such exercise of lien, setoff or
counterclaim or other event was to the principal amount of all Term Loans and
Revolving Loans and interests in Additional Credit Disbursements outstanding
prior to such exercise of lien, setoff or counterclaim or other event;
provided, however, that if any such purchase or purchases or adjustments shall
be made pursuant to this Section 2.13 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrower expressly consents to the
foregoing arrangements and agrees that any Bridge Lender holding a
participation or interest in a Term Loan or Revolving Loan or Additional Credit
Disbursement deemed to have been so purchased, to the fullest extent provided
by law, may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrower to such
Bridge Lender by reason thereof as fully as if such Bridge Lender had made a
Loan directly to the Borrower in the amount of such participation.
SECTION 2.14 Payments.
(a) The Borrower shall make each payment (including principal of
or interest on any Borrowing or any Additional Credit Disbursement or any Fees
or other amounts) hereunder and under any other Loan Document not later than
12:00 (noon), New York City time, on the date when due in immediately available
dollars, without setoff or counterclaim. Each such payment shall be made to
each of the Bridge Lenders, pro rata, or to the Administrative Agent, if any, at
the offices or to the accounts indicated to the Borrower from time to time.
(b) Whenever any payment (including principal of or interest on
any Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.15 Additional Credit Exposure.
(a) Facility. Masco Tech has prior to the Closing Date, issued
Guarantees and incurred Indebtedness in respect to (i) Designated Guarantee
Obligations and (ii) Designated Letters of Credit identified in Schedule 2.15
hereto, and subject to the terms and conditions and relying upon the
representations and warranties herein set forth, MascoTech may, in its sole
discretion, from time
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to time issue Guarantees or incur Indebtedness in respect of (x) Designated
Guarantee Obligations and (y) Designated Letters of Credit at any time and from
time to time on and after the Closing Date and until the earlier of the Final
Maturity Date and the termination of the Revolving Credit Commitments in
accordance with the terms hereof, in an aggregate principal amount at any time
outstanding that will not result in the Aggregate Revolving Credit Exposure,
after giving effect to any Additional Credit Exposure, exceeding the Total
Revolving Credit Commitment.
(b) Participations. MascoTech shall give prompt written notice
to the Administrative Agent and each other Revolving Credit Lender of the
occurrence of (a) any Additional Credit Event and (b) any Additional Credit
Disbursement. Such notice shall specify the aggregate principal or face amount
of the Additional Credit Event in which each such other Revolving Credit Lender
will participate. On the Closing Date, each other Revolving Credit Lender will
acquire a Pro Rata Percentage participation in all Additional Credit Exposures
identified on Schedule 2.15 hereto. Automatically and contemporaneously with
each Additional Credit Event occurring on or after the Closing Date, each such
other Revolving Credit Lender will acquire a Pro Rata Percentage participation
in all of the Additional Credit Exposure represented by each Additional Credit
Event. In furtherance of the foregoing, each such other Revolving Credit Lender
will hereby absolutely and unconditionally agree, upon receipt of notice as
provided above, to pay to the Administrative Agent, for the account of
MascoTech, such other Revolving Credit Lender's Pro Rata Percentage of each
Additional Credit Disbursement. Each such other Revolving Credit Lender
acknowledges and agrees that its obligation to acquire a participation in each
Additional Credit Exposure pursuant to this paragraph is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or an Event of Default,
and that each payment made in respect of each Additional Credit Disbursement
shall be made without any offset, abatement, withholding or reduction
whatsoever. Each such other Revolving Credit Lender shall comply with its
obligation under this paragraph by wire transfer of immediately available funds,
in the same manner as provided in Section 2.02(b) with respect to Loans made by
such other Revolving Credit Lender (and Section 2.02(b) shall apply, mutatis
mutandis, to the payment obligations of such other Revolving Credit Lender) and
the Administrative Agent shall promptly pay to MascoTech the amounts so received
by it from such other Revolving Credit Lender. Any amounts received by
MascoTech from the Borrower (or other party on behalf of the Borrower) in
respect of an Additional Credit Disbursement after receipt by MascoTech of the
proceeds of a sale of participations therein shall be promptly remitted to the
Administrative Agent; any such amounts received by the Administrative Agent
shall be promptly remitted by the Administrative Agent to such other Revolving
Credit Lenders that shall have made their payments pursuant to this paragraph
and to MascoTech, as their interests may appear. In furtherance of the
foregoing, each such other Revolving Credit Lender agrees that (i) the
Administrative Agent may (y) set off against the fees payable to such Revolving
Credit Lender under Section 2.05(b) such Revolving Credit Lender's Pro Rata
Percentage of the fees paid, and out-of-pocket costs incurred, by MascoTech
pursuant to its Guarantees in respect of Designated Letters of Credit, and (z)
pay such set off amount to MascoTech and (ii) it shall participate in and be
obligated to pay, in accordance with its Pro Rata Percentage, all such fees and
costs to the extent such Revolving Credit lender does not fully pay its Pro Rata
Percentage of such fees and costs pursuant to clause (i) above.
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ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Bridge Lenders that:
SECTION 3.01 Organization; Powers. Each of the Borrower and the
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has all
requisite power and authority to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted, (c) is qualified to
do business in, and is in good standing in, every jurisdiction where the nature
of its business so requires and (d) has the corporate power and authority to
execute, deliver and perform its obligations under each of the Loan Documents
and each other agreement or instrument contemplated hereby to which it is or
will be a party and, in the case of the Borrower, to borrow hereunder, except in
each case where the failure to satisfy any of the above could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.02 Authorization. The execution, delivery and
performance by each Loan Party of each of the Loan Documents to which such Loan
Party is a party, and in the case of the Borrower, the borrowings hereunder and
the Acquisition and the other transactions contemplated hereby and by the
Acquisition Agreement (collectively, the "Transactions") (a) have been duly
authorized by all requisite corporate and, if required, stockholder action on
the part of such Loan Party and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation, or of the certificate or articles of
incorporation or other constitutive documents or by-laws of the Borrower or any
Subsidiary, (B) any order of any Governmental Authority or (C) any provision of
any indenture, agreement or other instrument to which the Borrower or any
Subsidiary is a party or by which any of them or any of their property is or may
be bound, (ii) be in conflict with, result in a breach of or constitute (alone
or with notice or lapse of time or both) a default under, or give rise to any
right to accelerate or to require the prepayment, repurchase or redemption of
any obligation under any such indenture, agreement or other instrument, except
where any such conflict, violation, breach, default or right referred to in
clause (i) or (ii), individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, or (iii) result in the creation or
imposition of any Lien upon or with respect to any property or assets now owned
or hereafter acquired by the Borrower or any Subsidiary (other than any Lien
created hereunder or under the Security Documents).
SECTION 3.03 Enforceability. This Agreement has been duly
executed and delivered by the Borrower and constitutes, and each other Loan
Document when executed and delivered by each Loan Party thereto will constitute,
a legal, valid and binding obligation of such Loan Party enforceable against
such Loan Party in accordance with its respective terms, subject (a) as to
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium and
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other similar laws affecting the enforcement of creditors' rights generally,
from time to time in effect and (b) to general principles of equity (whether
enforcement is sought by a proceeding in equity or at law) .
SECTION 3.04 Governmental Approvals. No action, consent or
approval of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions or the
other transactions contemplated hereby, except for (a) the filing of appropriate
Uniform Commercial Code financing statements and filings with the United States
Patent and Trademark Office and the United States Copyright Office, (b) such as
have been made or obtained and are in full force and effect, (c) filings by the
Borrower pursuant to the Small Business Investment Act of 1958, as amended, and
(d) such actions, consents, approvals and filings the failure of which to obtain
or make could not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.05 No Material Adverse Change. There has been no
material adverse change in the business, assets, operations, properties,
financial condition, contingent liabilities or material agreements of MSX and/or
the Limited Companies, taken as a whole, since the December 31 Balance Sheet (as
such terms are defined in the Acquisition Agreement).
SECTION 3.06 Title to Properties; Possession Under Leases.
(a) Each of the Borrower and the Subsidiaries has good title to
(and with respect to real property good and marketable title to), or valid
leasehold interests in, all its material properties and assets (including all
properties listed on Schedule 3.16(b)), except where lack of such title or valid
leasehold interest does not materially interfere with its ability to conduct its
business as currently conducted. All interests of such persons in such material
properties and assets are free and clear of Liens, other than Liens expressly
permitted by Section 6.02.
(b) Except as set forth on Schedule 3.06(b), each of the Borrower
and the Subsidiaries has complied with all material obligations under all
material leases to which it is a party and all such leases are in full force and
effect. Each of the Borrower and the Subsidiaries enjoys peaceful and
undisturbed possession under all such material leases, except where failure to
enjoy such possession does not materially interfere with its ability to conduct
its business as currently conducted.
SECTION 3.07 Subsidiaries.
(a) Schedule 3.07 sets forth as of the Closing Date (after giving
effect to the Transactions) a list of all Subsidiaries and the percentage
ownership interest of the Borrower and any other person therein. The shares of
Capital Stock or other ownership interests so indicated on Schedule 3.07 are
fully paid and nonassessable and are owned, as of the Closing Date, by the
Borrower or a subsidiary of the Borrower, as applicable, directly or indirectly,
free and clear of all Liens (other than Liens permitted under the Loan
Documents). The Borrower owns directly or
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indirectly 100% of the issued and outstanding shares of Capital Stock of each
Subsidiary Guarantor.
(b) As of the Closing Date, except as set forth in Schedule 3.07,
none of the Subsidiaries is subject to a consensual encumbrance or restriction
that limits such Subsidiary's ability to make an Upstream Payment.
SECTION 3.08 Litigation; Compliance with Laws.
(a) Except as set forth on Schedule 3.08, there are no actions,
suits or proceedings at law or in equity or by or before any Governmental
Authority now pending or, to the knowledge of the Borrower, threatened against
or affecting the Borrower or any Subsidiary or any business, property or rights
of any such person (i) that involve any Loan Document or the Transactions or
(ii) as to which there is a reasonable likelihood of an adverse determination
and that could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
(b) None of the Borrower or any of the Subsidiaries or any of
their respective material properties or assets is in violation of, nor will the
continued operation of their material properties and assets as currently
conducted violate, any law, rule or regulation (including any zoning, building,
Environmental Law, ordinance, code or approval or any building permits), or is
in default with respect to any judgment, writ, injunction, decree or order of
any Governmental Authority, where such violation or default could reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.09 Use of Proceeds. The Borrower will use the proceeds
of the Loans only for the purposes specified in the preamble to this Agreement.
No part of the proceeds of the Loans will be used directly or indirectly for any
purpose which would violate or be inconsistent with Regulations G, T or X of the
Board of Governors of the Federal System of the United States of America.
SECTION 3.10 Tax Returns. Each of the Borrower and the
Subsidiaries has filed or caused to be filed all Federal, state or other
material tax returns required to have been filed by it and has paid or caused to
be paid all taxes due and payable by it and all assessments received by it to
the extent that such failure to file or nonpayment could reasonably be expected
to result in a Material Adverse Effect.
SECTION 3.11 No Material Misstatements. None of the information,
reports, financial statements, exhibits or schedules, taken as a whole,
furnished by or on behalf of the Borrower to the Administrative Agent or any
Bridge Lender in connection with the negotiation of any Loan Document or
included therein or delivered pursuant thereto contained, contains or will
contain any material misstatement of fact or omitted, omits or will omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were, are or will be made, not materially
misleading, provided that to the extent any such information, report, financial
statement, exhibit or schedule was based upon or constitutes a forecast or
projection,
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the Borrower represents only that it acted in good faith and utilized
reasonable assumptions and due care in the preparation of such information,
report, financial statement, exhibit or schedule.
SECTION 3.12 Employee Benefit Plans. Except to the extent failure
to comply could not reasonably be expected to result in a Material Adverse
Effect, each of the Borrower and the Subsidiaries is in compliance with the
applicable provisions of ERISA and the Code and the regulations and published
interpretations thereunder. The Borrower is not aware of any circumstances or
event with respect to any employee benefit plan maintained or contributed to by
an ERISA Affiliate that could result in a liability that could reasonably be
expected to have a Material Adverse Effect. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events, could reasonably be expected to result in a Material Adverse Effect.
SECTION 3.13 Environmental Matters. Except as set forth on
Schedule 3.13:
(a) The properties owned or operated by the Borrower and the
Subsidiaries (the "Properties") do not contain any Hazardous Materials in
amounts or concentrations that (i) constitute, or constituted a violation of,
(ii) require Remedial Action under, or (iii) could reasonably be expected to
give rise to liability under, Environmental Laws, which violations, Remedial
Actions and liabilities, in the aggregate, could reasonably be expected to
result in a Material Adverse Effect;
(b) The Properties and all operations of the Borrower and the
Subsidiaries are in compliance, and in the last three years have been in
compliance, with all Environmental Laws and all necessary Environmental Permits
have been obtained and are in effect, except to the extent that such
non-compliance or failure to obtain any necessary permits, in the aggregate,
could not be reasonably expected to result in a Material Adverse Effect.
(c) There have been no Releases or threatened Releases at, from,
under or proximate to the Properties or otherwise in connection with the
operations of the Borrower or the Subsidiaries, which Releases or threatened
Releases, in the aggregate, could reasonably be expected to result in a Material
Adverse Effect.
(d) None of the Borrower or any of the Subsidiaries has received
any notice of an Environmental Claim in connection with the Properties or the
operations of the Borrower or the Subsidiaries or with regard to any person
whose liabilities for environmental matters the Borrower or the Subsidiaries has
retained or assumed, in whole or in part, contractually, by operation of law or
otherwise, which, in the aggregate, could reasonably be expected to result in a
Material Adverse Effect; and
(e) Hazardous Materials have not been transported from the
Properties, nor have Hazardous Materials been generated, treated, stored or
disposed of at, on or under any of the Properties in a manner that could
reasonably be expected to give rise to liability under any Environmental Law,
nor have the Borrower or the Subsidiaries retained or assumed any liability,
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contractually, by operation of law or otherwise, with respect to the
generation, treatment, storage or disposal of Hazardous Materials, in each
case, which transportation, generation, treatment, storage or disposal, or
retained or assumed liabilities, in the aggregate, could reasonably be expected
to result in a Material Adverse Effect.
SECTION 3.14 Insurance. As of the date hereof and the Closing
Date, all insurance maintained by the Borrower and the Subsidiaries is in full
force and effect and all premiums that have become due and payable have been
duly paid. The Borrower and the Subsidiaries have insurance in such amounts and
covering such risks and liabilities as are in accordance with normal industry
practice.
SECTION 3.15 Security Documents.
(a) The Pledge Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Pledge
Agreement) and, when such Collateral is delivered to the Collateral Agent, the
Pledge Agreement shall constitute a fully perfected first priority Lien on, and
security interest in, all right, title and interest of the pledgors thereunder
in such Collateral, in each case prior and superior in right to any other
person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices specified on Schedule 3 to the Perfection Certificate (as defined in the
Security Agreement), the Security Agreement shall constitute a fully perfected
Lien on, and security interest in, all right, title and interest of the grantors
thereunder in such Collateral (other than the Intellectual Property, as defined
in the Security Agreement) that may be perfected by filing, recording or
registering a financing statement under the Uniform Commercial Code as in effect
in the United States (or any political subdivision thereof) and its territories
and possessions, in each case prior and superior in right to any other Lien on
any Collateral other than Liens expressly permitted by Section 6.02.
SECTION 3.16 Location of Real Property and Leased Premises.
(a) As of the Closing Date, none of the Borrower or any Subsidiary
owns any real property.
(b) Schedule 3.16(b) lists completely and correctly in all
material respects as of the Closing Date the address of all real property leased
by the Borrower and the Subsidiaries.
SECTION 3.17 Labor Matters. As of the date hereof and the Closing
Date, there are no organizational efforts, representation campaigns, elections
or proceedings, demands for recognition or collective bargaining, strikes,
lock-outs, work stoppages or slowdowns presently
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being made, undertaken or, to the knowledge of the Borrower or any Subsidiary,
threatened involving any employees of the Borrower or any Subsidiary. The
hours worked by and payments made to employees of the Borrower and the
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such matters
in any case where a Material Adverse Effect could reasonably be expected to
occur as a result of such violations. The consummation of the Transactions
will not give rise to any right of termination or right of renegotiation on the
part of any union under any collective bargaining agreement to which the
Borrower or any Subsidiary is bound.
ARTICLE IV
Conditions of Lending
The obligations of the Bridge Lenders to make Loans hereunder are
subject to the satisfaction of the following conditions:
SECTION 4.01 All Credit Events. On the date of each Borrowing
(each such event being called a "Credit Event"):
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 (or such notice shall have been deemed
given in accordance with Section 2.03).
(b) The representations and warranties set forth in Article III
hereof (other than these set forth in Sections 3.05 and 3.08 (a)) shall be true
and correct in all material respects on and as of the date of such Credit Event
with the same effect as though made on and as of such date, except to the extent
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties shall have been true and correct
in all material respects on such earlier date).
(c) Each Loan Party shall be in compliance with all the terms and
provisions set forth herein and in each other Loan Document on its part to be
observed or performed, and at the time of and immediately after such Credit
Event, no Event of Default or Default shall have occurred and be continuing.
Each Credit Event shall be deemed to constitute a representation and warranty
by the Borrower on the date of such Credit Event as to the matters specified in
paragraphs (b) (except as aforesaid) and (c) of this Section 4.01.
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SECTION 4.02 First Credit Event. On the Closing Date:
(a) All legal matters incident to this Agreement, the Borrowings
and extensions of credit hereunder and the other Loan Documents shall be
reasonably satisfactory to the Bridge Lenders.
(b) The Bridge Lenders shall have received (i) a copy of the
certificate or articles of incorporation, including all amendments thereto, of
each Loan Party, certified as of a recent date by the Secretary of State of the
state of its organization, and a certificate as to the good standing of each
Loan Party as of a recent date, from such Secretary of State; (ii) a certificate
of the Secretary or Assistant Secretary of each Loan Party dated the Closing
Date and certifying (A) that attached thereto is a true and complete copy of the
by-laws of such Loan Party as in effect on the Closing Date and at all times
since a date prior to the date of the resolutions described in clause (B) below,
(B) that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Loan Party authorizing the execution,
delivery and performance of the Loan Documents to which such Loan Party is a
party and, in the case of the Borrower, the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect, (C) that the certificate or articles of incorporation of such Loan
Party have not been amended since the date of the last amendment thereto shown
on the certificate of good standing furnished pursuant to clause (i) above, and
(D) as to the incumbency and specimen signature of each officer executing any
Loan Document or any other document delivered in connection therewith on behalf
of such Loan Party; and (iii) a certificate of another officer as to the
incumbency and specimen signature of the Secretary or Assistant Secretary
executing the certificate pursuant to (ii) above.
(c) The Administrative Agent shall have received all Fees and
other amounts due and payable on or prior to the Closing Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Borrower hereunder or under any other Loan
Document.
(d) The Pledge Agreement shall have been duly executed by the
Loan Parties party thereto and delivered to the Bridge Lenders, and all the
outstanding Capital Stock of the Subsidiaries shall have been duly and validly
pledged thereunder to the Collateral Agent for the ratable benefit of the
Secured Parties and certificates representing such shares, accompanied by
instruments of transfer or stock powers endorsed in blank, shall be in the
actual possession of the Collateral Agent, provided that (i) neither the
Borrower nor any Domestic Subsidiary shall be required to pledge more than 65%
of the Capital Stock of any Foreign Subsidiary and (ii) no Foreign Subsidiary
shall be required to pledge the Capital Stock of any of its Subsidiaries.
(e) The Security Agreement shall have been duly executed by the
Loan Parties party thereto and shall have been delivered to the Bridge Lenders
and each document (including each Uniform Commercial Code financing statement)
required by law or reasonably requested by the Administrative Agent to be filed,
registered or recorded in order to create in favor of the Collateral
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Agent for the benefit of the Secured Parties a valid, legal and perfected
first-priority security interest in and lien on the Collateral described in
such agreement, subject to Liens permitted by Section 6.02, shall have been
delivered to the Collateral Agent.
(f) The Bridge Lenders shall have received the results of a
search of the Uniform Commercial Code (or equivalent filings) filings made with
respect to the Loan Parties in the states (or other jurisdictions) in which the
chief executive office of each such person is located, any offices of such
persons in which records have been kept relating to Accounts (as defined in the
Security Agreement) and the other jurisdictions in which Uniform Commercial Code
filings (or equivalent filings) are to be made pursuant to the preceding
paragraph, together with copies of the financing statements (or similar
documents) disclosed by such search, and accompanied by evidence satisfactory to
the Bridge Lenders that the Liens indicated in any such financing statement (or
similar document) would be permitted under Section 6.02 or have been released.
(g) The Bridge Lenders shall have received a Perfection
Certificate with respect to the Loan Parties dated the Closing Date and duly
executed by a Responsible Officer of the Borrower.
(h) The Subsidiary Guarantee Agreement shall have been duly
executed by the Loan Parties party thereto and shall have been delivered to the
Bridge Lenders.
(i) The Collateral Agent shall have received a copy of, or a
certificate as to coverage under, the insurance policies required by Section
5.02 and the applicable provisions of the Security Documents, each of which
shall be endorsed or otherwise amended to include a "standard" or "New York"
lender's loss payable endorsement (in the case of each property or boiler
policy) and to name the Collateral Agent as additional insured, in form and
substance reasonably satisfactory to the Collateral Agent.
(j) The Acquisition shall have been consummated or shall be
consummated simultaneously with the first Credit Event in accordance with
applicable law, in accordance with the Acquisition Agreement.
(k) The Equity Contribution shall have been made prior to or
simultaneously with the first Credit Event.
(l) The Senior Subordinated Note and related documents shall be
duly executed and delivered by all parties in the form substantially as set
forth on Exhibit E attached hereto.
(m) All governmental consents and approvals and all material
third party consents shall have been obtained with respect to the Transactions
and the other transactions contemplated hereby to the extent required, all
applicable appeal periods shall have expired and there shall be no governmental
or judicial action, actual or threatened, that has or could have a reasonable
likelihood
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ARTICLE V
Affirmative Covenants
of restraining, preventing or imposing burdensome conditions on the
Transactions or the other transactions contemplated hereby.
The Borrower covenants and agrees with each Bridge Lender that so long
as this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document have been paid in
full, unless the Required Bridge Lenders shall otherwise consent in writing, the
Borrower will, and will cause each of the Subsidiaries to:
SECTION 5.01 Existence; Business and Properties; Compliance with
Laws.
(a) Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal existence, except as otherwise
expressly permitted under Section 6.05.
(b) Do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights, licenses,
permits, franchises, authorizations, patents, copyrights, trademarks and trade
names material to the conduct of its business; comply in all material respects
with all applicable laws, rules, regulations and decrees and orders of any
Governmental Authority, whether now in effect or hereafter enacted except where
noncompliance could not reasonably be expected to result in a Material Adverse
Effect; and at all times maintain and preserve all property material to the
conduct of such business and keep such property in good repair, working order
and condition (reasonable wear and tear excepted) and from time to time make, or
cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted in all material
respects at all times.
SECTION 5.02 Insurance.
(a) Keep its insurable properties adequately insured at all times
by financially sound and reputable insurers; maintain such other insurance, to
such extent and against such risks, including fire and other risks insured
against by extended coverage, as is customary with companies in the same or
similar businesses operating in the same or similar locations, including
commercial general liability insurance against claims for bodily injury or death
or property damage occurring upon, in, about or in connection with the use of
any properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law.
(b) In connection with the covenants set forth in this Section
5.02, it is understood and agreed that:
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(i) none of the Collateral Agent or any Bridge Lender, or their
respective agents or employees shall be liable for any loss or damage
insured by the insurance policies required to be maintained under this
Section 5.02, it being understood that (A) the Borrower and the other
Loan Parties shall look solely to their insurance companies or any other
parties other than the aforesaid parties for the recovery of such loss or
damage and (B) the Borrower shall use reasonable efforts to cause such
insurance policies to waive the insurer's rights of subrogation against
the Collateral Agent and the Bridge Lenders or their agents or employees.
If, however, any such insurance policy does not provide waiver of
subrogation rights against such parties, as required above, then the
Borrower hereby agrees, to the extent permitted by law, to waive its right
of recovery, if any, against the Collateral Agent and the Bridge Lenders
and their agents and employees in respect of any such loss or damage; and
(ii) the designation of any form, type or amount of insurance
coverage by the Collateral Agent under this Section 5.02 shall in no event
be deemed a representation, warranty or advice by the Collateral Agent that
such insurance is adequate for the purposes of the business of the Borrower
and the Subsidiaries or the protection of their properties.
SECTION 5.03 Obligations and Taxes. Pay its Indebtedness and
other monetary obligations promptly and in accordance with their terms and pay
and discharge promptly when due all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits or in respect of its
property, before such taxes, assessments and governmental charges shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise that, if unpaid, might give rise to a Lien upon such
properties or any part thereof; provided, however, that such payment and
discharge shall not be required with respect to (i) any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and the Borrower shall have
set aside on its books adequate reserves with respect thereto in accordance with
GAAP and such contest operates to suspend collection of the contested
obligation, tax, assessment or charge and enforcement of a Lien and (ii) any
Indebtedness or other obligation or any tax, assessment, charge, levy or claims,
the failure to pay and discharge when due which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
SECTION 5.04 Financial Statements, Reports, etc. Furnish to each
Bridge Lender:
(a) within 90 days after the end of each fiscal year, its
consolidated balance sheet and related statements of income, stockholders'
equity and cash flows showing the consolidated financial condition of the
Borrower and its consolidated subsidiaries as of the close of such fiscal year
and the consolidated results of its operations and the operations of such
subsidiaries during such year (and showing, on a comparative basis, the figures
for the previous year), all audited by Coopers & Lybrand or other independent
public accountants of recognized national standing acceptable to the Required
Bridge Lenders and accompanied by an opinion of such accountants (which shall
not be qualified in any material respect) to the effect that such consolidated
financial statements fairly
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present in all material respects the financial condition and results of
operations of the Borrower and its consolidated subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, its unaudited consolidated balance sheet
and related statements of income, stockholders' equity and cash flows showing
the consolidated financial condition of the Borrower and its consolidated
subsidiaries as of the close of such fiscal quarter and the consolidated results
of its operations and the operations of such subsidiaries during such fiscal
quarter and the then elapsed portion of the fiscal year (and showing, on a
comparative basis, such information as of and for the corresponding dates and
periods of the preceding fiscal year), all certified by a Financial Officer of
the Borrower as fairly presenting in all material respects the consolidated
financial condition and results of operations of the Borrower and its
consolidated subsidiaries on a consolidated basis in accordance with GAAP
(except for the absence of footnote disclosure) consistently applied, subject to
year-end audit adjustments;
(c) within 30 days after the end of each month (other than the
last month of any fiscal quarter), its unaudited consolidated balance sheet and
related statements of income, stockholders' equity and cash flows, showing the
consolidated financial condition of the Borrower and its consolidated
subsidiaries as of the close of such month and the consolidated results of its
operations and the operations of such subsidiaries during such month and the
then-elapsed portion of the fiscal year;
(d) concurrently with any delivery of financial statements under
sub-paragraph (a) or (b) above, a certificate of the Financial Officer
certifying such statements and (i) certifying that no Event of Default or
Default has occurred or, if an Event of Default or Default has occurred,
specifying the nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto, and (ii) setting forth computations
in reasonable detail satisfactory to the Bridge Lenders demonstrating compliance
(A) with the covenants contained in Sections 6.09, 6.10 and 6.11 and (B) with
the maximum limitation amounts contained in the several clauses in Sections
6.01, 6.04, 6.05 and 6.06; and
(e) promptly, from time to time, such other information regarding
the operations, business affairs and financial condition of the Borrower or any
Subsidiary, or compliance with the terms of any Loan Document, in each case as
any Bridge Lender may reasonably request.
SECTION 5.05 Litigation and Other Notices. Furnish to each
Bridge Lender written notice of the following promptly after (and, in any event,
no later than five days after) any Responsible Officer of the Borrower obtains
knowledge thereof:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) taken or proposed to be taken
with respect thereto; and
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(b) the filing or commencement of, or any written threat or
notice of intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against the Borrower or any Subsidiary that could reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.06 Employee Benefits. (a) Comply in all material
respects with the applicable provisions of ERISA and the Code to the extent
failure to comply could reasonably be expected to result in a Material Adverse
Effect and (b) furnish to the Administrative Agent promptly, and in any event
within 10 days after any Responsible Officer of the Borrower knows or has reason
to know that, any ERISA Event has occurred that, alone or together with any
other ERISA Event could reasonably be expected to result in liability of the
Borrower or any Subsidiary in an aggregate amount exceeding $5,000,000, a
statement of a Financial Officer of the Borrower setting forth details as to
such ERISA Event and the action, if any, that the Borrower has taken or proposes
to take with respect thereto.
SECTION 5.07 Maintaining Records; Access to Properties and
Inspections. Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law are made in
relation to its business and activities. Each Loan Party and each Subsidiary
(a) will permit any representatives designated by the Required Bridge Lenders to
visit and inspect the financial records and the properties of the Borrower or
any Subsidiary at reasonable times and as often as reasonably requested and to
make extracts from and copies of such financial records, and (b) will permit any
representatives designated by the Required Bridge Lenders to discuss the
affairs, finances and condition of the Borrower or any Subsidiary with the
officers thereof and independent accountants therefor; provided, however, that
the number of visits pursuant to clause (a) above in any year shall not exceed
two, unless (i) a Default or Event of Default shall have occurred and be
continuing or (ii) the Collateral Agent, or any Bridge Lender, determines in
good faith that any material event or material change has occurred with respect
to the Borrower and the Subsidiaries and that as a result of such event or
change more frequent visits are necessary or prudent.
SECTION 5.08 Use of Proceeds. Use the proceeds of the Loans only
for the purposes set forth in the preamble to this Agreement.
SECTION 5.09 Compliance with Environmental Laws. Comply, and
cause all lessees and other persons occupying its Properties to comply, in all
material respects with all Environmental Laws and Environmental Permits
applicable to its operations and Properties and the operations conducted
thereon; obtain and renew all material Environmental Permits necessary for its
Properties; and conduct any Remedial Action in accordance with Environmental
Laws, except where noncompliance with Environmental Laws and Environmental
Permits or the failure to obtain or renew such Environmental Permits or conduct
such Remedial Action, in the aggregate, could not be reasonably expected to
result in a Material Adverse Effect.
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SECTION 5.10 Further Assurances. Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements) that may be required under applicable law, or that the Required
Bridge Lenders, the Administrative Agent or the Collateral Agent may reasonably
request, in order to effectuate the transactions contemplated by the Loan
Documents and in order to grant, preserve, protect and perfect the validity and
first priority of the security interests created or intended to be created by
the Security Documents (subject to Liens permitted by Section 6.02). The
Borrower will cause any subsequently acquired or organized Domestic Subsidiary
to execute a Subsidiary Guarantee Agreement and each applicable Security
Document in favor of the Collateral Agent. In addition, from time to time, the
Borrower will, at its cost and expense, promptly secure the Obligations by
pledging or creating, or causing to be pledged or created, perfected security
interests with respect to such of its assets and properties as the Collateral
Agent or the Required Bridge Lenders shall designate (it being understood that
it is the intent of the parties that the Obligations shall be secured by, among
other things, substantially all the assets of the Borrower and the Domestic
Subsidiaries, including real and other properties acquired subsequent to the
Closing Date). Such security interests and Liens will be created under the
Security Documents and other security agreements, and other instruments and
documents in form and substance satisfactory to the Bridge Lenders, and the
Borrower shall deliver or cause to be delivered to the Bridge Lenders all such
instruments and documents (including legal opinions, title insurance policies,
lien searches and surveys) as the Bridge Lenders shall reasonably request to
evidence compliance with this Section. The Borrower agrees to provide such
evidence as the Bridge Lenders shall reasonably request as to the perfection
and priority status of each such security interest and Lien. Each Loan Party
agrees promptly to notify the Bridge Lender if any material portion of the
Collateral owned or held by such Loan Party is damaged or destroyed.
ARTICLE VI
Negative Covenants
The Borrower covenants and agrees with each Bridge Lender that, so
long as this Agreement shall remain in effect and until the Commitments have
been terminated and the principal of and interest on each Loan, any Fee and any
other expense or amount payable under any Loan Document have been paid in full,
unless the Required Bridge Lenders shall otherwise consent in writing, the
Borrower will not, and will neither cause nor permit any of the Subsidiaries to:
SECTION 6.01 Indebtedness. Incur, create, assume or permit to
exist any Indebtedness, except:
(a) Indebtedness in respect of NBD Revolving Loans and other
Indebtedness existing on the date hereof and set forth on Schedule 6.01;
(b) Indebtedness created hereunder and under the other Loan
Documents;
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(c) (i) in the case of the Borrower, the Senior Subordinated Note
and the Debentures and (ii) in the case of the Subsidiary Guarantors, the
Guarantees guaranteeing the Senior Subordinated Note;
(d) Permitted Foreign Indebtedness and the aggregate outstanding
amount of Permitted Foreign Investments made pursuant to Section 6.04(i);
(e) intercompany loans and letters of credit and guarantees in
support of Indebtedness and advances permitted by Section 6.04(b), (h), (i) and
(k).
(f) Indebtedness consisting of purchase money Indebtedness
(including purchase money Indebtedness that is in existence with respect to any
asset or other property at the time such asset or other property is acquired),
industrial revenue bonds or Capital Lease Obligations incurred in the ordinary
course of business after the Closing Date to finance Capital Expenditures,
provided that (i) the Indebtedness incurred shall not exceed the purchase price
of the assets financed thereby and (ii) the aggregate principal amount of any
Indebtedness or Capital Lease Obligations incurred during each fiscal year
pursuant to this paragraph (g) shall not exceed $10,000,000;
(g) Indebtedness of the Borrower and the Subsidiaries owed to
(including obligations in respect of letters of credit for the benefit of) any
person (i) providing worker's compensation, health, disability or other employee
benefits or property, casualty or liability insurance to any Loan Party or (ii)
supporting real estate lease payments of any Loan Party, or pursuant to
reimbursement or indemnification obligations to such person, in each case
incurred in the ordinary course of business;
(h) Indebtedness of the Borrower or any Subsidiary in respect of
performance bonds, bid bonds, appeal bonds, surety bonds and similar obligations
and trade related letters of credit, in each case provided in the ordinary
course of business, including those incurred to secure health, safety and
environmental obligations in the ordinary course of business;
(i) Indebtedness issued by the Borrower, in lieu of the payment
of cash, in connection with the purchase or redemption of Capital Stock held by
officers, directors or employees (or Permitted Transferees (as such term is
defined in the Stockholders' Agreement) of any such person) of the Borrower or
any Subsidiary, subject to the proviso in Section 6.06(a)(iv);
(j) Indebtedness incurred pursuant to any sale and lease-back
transaction made in accordance with Section 4.12;
(k) unsecured Indebtedness in addition to that permitted by
clauses (a) through (j) above in an aggregate principal amount not to exceed
$1,000,000 at any time outstanding; and
(l) extensions, renewals or refinancings of Indebtedness under
paragraphs (a) and (g) (subject to the proviso contained in such clause (g)) so
long as (A) such Indebtedness
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("Refinancing Indebtedness") is in an aggregate principal amount not greater
than the aggregate principal amount of the Indebtedness being extended,
renewed or refinanced plus the amount of any premiums required to be paid
thereon and fees and expenses associated therewith, (B) such Refinancing
Indebtedness has a later or equal final maturity and a longer or equal weighted
average life than the Indebtedness being extended, renewed or refinanced, (C)
the interest rate applicable to such Refinancing Indebtedness is a market
interest rate (as determined in good faith by the Board of Directors of the
Borrower) as of the time of such extension, renewal or refinancing, (D) if the
Indebtedness being extended, renewed or refinanced is subordinated to the
Obligations, such Refinancing Indebtedness is subordinated to the Obligations
to the same extent as the Indebtedness being extended, renewed or refinanced
and (E) at the time and after giving effect to such extension, renewal or
refinancing, no Default or Event of Default shall have occurred and be
continuing.
SECTION 6.02 Liens. Create, incur, assume or permit to exist any
Lien on any property or assets (including stock or other securities of any
person, including any Subsidiary) now owned or hereafter acquired by it or on
any income or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrower and the
Subsidiaries existing on the date hereof and set forth on Schedule 6.02(a),
provided that such Liens shall secure only those obligations which they secure
on the date hereof (and extensions, renewals and refinancings of such
obligations permitted by Section 6.01);
(b) any Lien created under the Loan Documents;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary, provided that (i) such
Lien is not created in contemplation of or in connection with such acquisition
and (ii) such Lien does not apply to any other property or assets of the
Borrower or any Subsidiary;
(d) Liens for taxes, assessments, governmental charges and levies
not yet due or which are being contested or are unpaid in compliance with
Section 5.03;
(e) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens arising in the ordinary course of business and
securing obligations that are not due and payable or which are being contested
in compliance with Section 5.03;
(f) Liens of landlords or of mortgagees of landlords arising by
operation of law, provided that the rental payments secured thereby are not yet
due and payable;
(g) pledges and deposits made in the ordinary course of business
in compliance with workmen's compensation, unemployment insurance and other
social security or similar laws or regulations;
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(h) pledges and deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital Lease
Obligations), statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business;
(i) zoning restrictions, easements, rights-of-way, minor defects
or irregularities in title, restrictions on use of real property and other
similar encumbrances which, in the aggregate, do not materially detract from the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of the Borrower or the Subsidiaries;
(j) purchase money security interests in real property,
improvements thereto or equipment hereafter acquired (or, in the case of
improvements, constructed) by the Borrower or any Subsidiary, provided that (i)
such security interests secure Indebtedness permitted by Section 6.01(f), (ii)
such security interests are incurred, and the Indebtedness secured thereby is
created, within 120 days after such acquisition (or construction) or are
incurred to extend, renew or refinance such security interests and Indebtedness
incurred within such 120- day period, (iii) the Indebtedness secured thereby
does not exceed the lesser of the cost or the fair market value of such real
property, improvements or equipment at the time of such acquisition (or
construction) and (iv) such security interests do not apply to any other
property or assets of the Borrower or any Subsidiary;
(k) attachment or judgment Liens securing judgments, unless the
aggregate amount of such judgments shall (A) exceed $500,000 (except to the
extent the Administrative Agent shall have received satisfactory evidence that
such judgments are covered by insurance) and (B) remain undischarged for a
period of more than 30 consecutive days during which execution shall not be
effectively stayed;
(l) Liens to secure Capital Lease Obligations, industrial revenue
bonds or Indebtedness permitted by Section 6.01(f), provided that such Liens do
not extend to any property or assets of the Borrower or any Subsidiary other
than the property or assets financed thereby;
(m) UCC filings that relate to the preservation of claims in
respect of interests in property subject to operating leases (it being agreed
that the permissiveness of such filing hereunder shall not be considered a
waiver of any claim that the Bridge Lenders or the Collateral Agent may have on
the property to which such interest relates);
(n) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payment of custom duties in connection with the
importation of goods in the ordinary course of business; and
(o) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by the
Borrower or any of the Subsidiaries in the ordinary course of business.
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SECTION 6.03 Intentionally Omitted.
SECTION 6.04 Investments, Loans and Advances. Purchase, hold or
acquire any Capital Stock, evidences of Indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist
any investment or any other interest in, any other person, except:
(a) investments by the Borrower or any Subsidiary existing on the
Closing Date in the Capital Stock of any Subsidiary;
(b) investments, loans or advances made by (i) any Subsidiary in
or to the Borrower or (ii) the Borrower or any Subsidiary in or to the Borrower
or any other Subsidiary;
(c) Permitted Investments, and purchases and repurchases of
Capital Stock pursuant to Article IV, Section 2.5 or Section 2.6 of the
Stockholders' Agreement;
(d) investments consisting of non-cash consideration received in
connection with a sale of assets permitted by Section 6.05;
(e) investments arising from transactions by any Loan Party or
any of the Subsidiaries with customers or suppliers (including Affiliates to the
extent permitted by Section 6.07) in the ordinary course of business, including
endorsements of negotiable instruments and debt obligations and other
investments received in connection with the bankruptcy or reorganization of
customers and suppliers and in settlement of delinquent obligations of, and
other disputes with, customers or suppliers, arising in the ordinary course of
business, and in the exercise of the reasonable business judgment of such
Borrower or such Subsidiary;
(f) advances not exceeding $250,000 in the aggregate outstanding
at any time to employees made to cover payroll, travel and similar expenses that
are expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP and that are made in the ordinary course of business;
(g) loans or advances to employees made in the ordinary course of
business not exceeding $250,000 in the aggregate outstanding at any time;
(h) investments, loans or advances made by any Foreign Subsidiary
in or to any other Foreign Subsidiary;
(i) Permitted Foreign Investments in APX-Brazil (as such term is
defined in the Acquisition Agreement) not to exceed $3,000,000 in any fiscal
year of the Borrower;
(j) Capital Expenditures and other purchases permitted hereunder;
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(k) investments, loans and advances existing on the date hereof
and as set forth on Schedule 6.04(k) and renewals, replacements and extensions
thereof, provided that the amount of any such renewed, replaced or extended
investment, loan or advance shall be for an amount no greater than the amount of
the investment, loan or advance being renewed or extended;
(l) investments, loans and advances in or to Joint Ventures not
exceeding in the aggregate $1,000,000 at any time outstanding; and
(m) investments, loans or advances in addition to those permitted
by clauses (a) through (l) above not exceeding in the aggregate $1,000,000 at
any time outstanding.
SECTION 6.05 Mergers, Consolidations and Sales of Assets. Merge
into or consolidate with any other person, or permit any other person to merge
into or consolidate with it, or sell, transfer, lease or otherwise dispose of
(in one transaction or in a series of transactions) all or any of its assets
(whether now owned or hereafter acquired) or any Capital Stock of any
Subsidiary, except that:
(a) the Borrower and any Subsidiary may sell inventory and
Permitted Investments and sell obsolete or worn-out assets in the ordinary
course of business;
(b) if at the time thereof and immediately after giving effect
thereto no Event of Default or Default shall have occurred and be continuing,
(i) any wholly owned subsidiary may merge into the Borrower in a transaction in
which the Borrower is the surviving corporation, (ii) any wholly owned
subsidiary may merge into or consolidate with any other wholly owned Domestic
Subsidiary in a transaction in which the surviving entity is a wholly owned
Domestic Subsidiary; (iii) any 90%-Owned Foreign Subsidiary may merge into any
other 90%-Owned Foreign Subsidiary in a transaction in which the surviving
entity is a 90%-Owned Foreign Subsidiary and no person other than the Borrower,
a wholly owned Domestic Subsidiary or a 90%-Owned Foreign Subsidiary receives
any consideration other than interests in the surviving entity to any applicable
minority interest holder not exceeding the proportionate interests of such
minority interest holder in the applicable Subsidiary and (iv) any direct wholly
owned subsidiary of any Foreign Subsidiary may merge into such Foreign
Subsidiary or into another direct wholly owned subsidiary of such Foreign
Subsidiary so long as no person other than such Foreign Subsidiary receives any
consideration;
(c) (i) any Subsidiary Guarantor or any Subsidiary may sell,
transfer, lease or otherwise dispose of any of its assets to any Loan Party,
(ii) any 90%-Owned Foreign Subsidiary may sell, transfer, lease or otherwise
dispose of any of its assets to any 90%-Owned Foreign Subsidiary and (iii) any
direct wholly owned subsidiary of any Foreign Subsidiary may sell, transfer,
lease or otherwise dispose of any of its assets to such Foreign Subsidiary or
another wholly owned subsidiary of such Foreign Subsidiary;
(d) any sale and lease-back transaction may be effected;
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(e) any Loan Party or any Subsidiary may sell any assets,
provided that (i) the aggregate fair market value of all such assets sold
pursuant to this clause (e) shall not exceed $1,000,000 in any fiscal year and
(ii) within 60 days after any such asset sale, such Loan Party or Subsidiary
shall apply the Net Cash Proceeds thereof to purchase assets used in the
business of such Loan Party or Subsidiary or to make an investment in another
Loan Party that within such 60-day period uses the proceeds of such investment
to purchase assets used in the business of such other Loan Party;
(f) any Loan Party or any Subsidiary may lease or sublease
properties in which it has interests or lease any other property in the ordinary
course of business; and
(g) a Foreign Subsidiary may issue (i) any director qualifying
shares and (ii) its Capital Stock (A) to the extent it is required to do so
pursuant to local ownership laws in the applicable foreign country and (B) to
the management of such Foreign Subsidiary under any employee stock option, stock
purchase, stock grant or other similar incentive or employee benefit plan in
existence from time to time.
provided, however, that any sale, transfer or other disposition of assets or
stock otherwise permitted by this Section 6.05 (other than pursuant to clauses
(a), (b) and (c) above) shall not be permitted unless (A) such sale, transfer
or other disposition is for consideration at least 80% (or 100% in the case of
lease payments) of which is cash and (B) such consideration is at least equal
to the fair market value of the assets sold, transferred or disposed of (as
determined in good faith by the board of directors of the Borrower) and
provided, further that for purposes of the immediately preceding proviso, (i)
any proceeds from such sale used to pay the outstanding principal amount of,
premium or penalty, if any, interest and other amounts on any Indebtedness
required to be repaid under the terms thereof or by applicable law as a result
of such sale, transfer or other disposition and (ii) in the case of a sale of a
distinct business unit that is structured as a sale of assets, the assumption
of liabilities (other than Indebtedness) of such business unit by the purchaser
thereof shall, in each case, be deemed cash.
SECTION 6.06 Dividends and Distributions; Restrictions on Ability
of Subsidiaries to Pay Dividends. (a) Declare or pay, directly or indirectly,
any dividend or make any other distribution (by reduction of capital or
otherwise), whether in cash, property, securities or a combination thereof, with
respect to any shares of its Capital Stock or directly or indirectly redeem,
purchase, retire or otherwise acquire for value (or permit any Subsidiary to
purchase or acquire for value) any shares of any class of its Capital Stock or
set aside any amount for any such purpose; provided, however, that:
(i) any Subsidiary may declare and pay dividends to, repurchase
its Capital Stock from, or make other distributions to, the Borrower or any
of its wholly owned Subsidiary (or, in the case of non-wholly owned
Subsidiaries, to or from the Borrower or any Subsidiary and each other
owner of Capital Stock of such Subsidiary on a pro rata basis (or more
favorable
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basis from the perspective of the Borrower or such Subsidiary) based on
their relative ownership interests);
(ii) the Borrower may declare and pay dividends solely in shares
of Capital Stock (other than Disqualified Stock) of the Borrower and may
exchange any shares of its Capital Stock for other shares of its Capital
Stock;
(iii) (A) the Borrower or a Subsidiary may purchase or redeem, and
the Borrower may make payments of principal and interest on Indebtedness
issued pursuant to Section 6.01(i) to purchase or redeem, shares of Capital
Stock (or options or warrants in respect of such shares) of the Borrower or
any Subsidiary (including related stock appreciation rights or similar
securities) pursuant to Article IV, Section 2.5 or Section 2.6 of the
Stockholders' Agreement and (B) any Subsidiary may declare and pay
dividends or make other distributions to the Borrower the proceeds of which
are to be used by the Borrower pursuant to clause (A);
(iv) the Borrower shall be permitted to issue Debentures to any
person in exchange for shares of Series A Preferred Stock of Holdings in
accordance with the articles of incorporation of Holdings if no Default or
Event of Default shall have occurred and be continuing.
(b) Permit its subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such subsidiary to (i) pay any dividends or
make any other distributions on its Capital Stock or any other equity interest
or (ii) make or repay any loans or advances to the Borrower or the parent of
such subsidiary (subclauses (i) and (ii) are collectively referred to as an
"Upstream Payment") other than encumbrances and restrictions:
(A) pursuant to the Loan Documents or the Senior Subordinated
Note documents;
(B) existing under, or by reason of, applicable law;
(C) contained in any debt instrument relating to a person
acquired after the date hereof, provided that (x) such
instrument was in existence at the time of such acquisition
and was not created in contemplation of or in connection
with such acquisition, (y) the officers of the Borrower
reasonably believe at the time of such acquisition that the
terms of such instrument will not encumber or restrict the
ability of such acquired person to make an Upstream Payment
and (z) such instrument contains no express encumbrances or
restrictions on the ability of such acquired person to make
an Upstream Payment, provided that such instrument contains
no express encumbrances or restrictions on the ability of
the applicable obligor thereon to make an Upstream Payment;
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(D) contained in or required by Permitted Foreign Indebtedness;
and
(E) contained in agreements for Asset Sales permitted under
Section 6.05.
SECTION 6.07 Transactions with Affiliates. Sell or transfer any
property or assets to, or purchase or acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Affiliates, except
that the Borrower or any Subsidiary may engage in any of the foregoing
transactions in the ordinary course of business at prices and on terms and
conditions not less favorable to the Borrower or such Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties; provided,
however, that the foregoing restriction shall not apply to (i) any transactions
expressly permitted by this Agreement, including those permitted by Section
6.06, (ii) transactions among Foreign Subsidiaries, (iii) transactions pursuant
to agreements entered into or in effect on the Closing Date and set forth on
Schedule 6.07, including amendments thereto entered into after the Closing
Date, provided that the terms of any such amendment are not, in the aggregate,
less favorable to the Bridge Lenders than the terms of such agreement prior to
such amendment or (iv) any transactions among the Loan Parties.
SECTION 6.08 Other Indebtedness and Agreements.
(a) (i) Make any distribution, whether in cash, property,
securities or a combination thereof, other than scheduled payments of principal
and interest as and when due (to the extent not prohibited by applicable
subordination provisions), in respect of, or pay, or offer or commit to pay, or
directly or indirectly redeem, repurchase, retire or otherwise acquire for
consideration, or set apart any sum for the aforesaid purposes, any of the
Senior Subordinated Note, the Debentures or any other Indebtedness for borrowed
money (other than Indebtedness under the Loan Documents and Indebtedness
incurred pursuant to Section 6.01(a), (d), (e), (f), (g), (h), (j) or (k) or any
Refinancing Indebtedness in respect thereof) of any Loan Party or any
Subsidiary, (ii) make any payment or prepayment of any such Indebtedness that
would violate the terms of this Agreement or of such Indebtedness, any agreement
or document evidencing, related to or securing the payment or performance of
such Indebtedness or any subordination agreement or provision applicable to such
Indebtedness or (iii) pay in cash any amount in respect of such Indebtedness
that may at the applicable Loan Party's or Subsidiary's option be paid in kind
thereunder.
(b) Notwithstanding anything contained in this Section 6.08 to
the contrary,
(i) the Borrower and the Subsidiaries shall be permitted to
refinance any Indebtedness to the extent permitted by Section 6.01; and
(ii) the Borrower shall be permitted to make payments in respect
of any Senior Subordinated Note in accordance with the terms thereof and to
pay interest on the Debentures solely in the form of additional Debentures
in accordance with the terms thereof.
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(c) Permit any waiver, supplement, modification, amendment,
termination or release of any indenture, instrument or agreement governing the
Debentures, the Senior Subordinated Note (or any Indebtedness issued to
refinance such Indebtedness in accordance with this Agreement), to the extent
that any such waiver, supplement, modification, amendment, termination or
release would be adverse to the Bridge Lenders in any material respect.
SECTION 6.09 Minimum EBITDA. Permit Consolidated EBITDA on the
last day of each applicable period indicated below for the applicable period
indicated below to be less than the corresponding cumulative amount indicated
below:
Period Amount
Quarter ending March 31, 1997 $ 5,100,000
Six months ending June 30, 1997 $12,600,000
Nine months ending September 30, 1997 $20,800,000
SECTION 6.10 Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio of the Borrower and its Subsidiaries to be less than the
respective ratios indicated below on the last day of each period indicated
below:
Period Ratio
January 1, 1997 through December 31, 1997 1.00 : 1.00
January 1, 1998 through December 31, 1998 1.10 : 1.00
January 1, 1999 through December 31, 1999 1.15 : 1.00
January 1, 2000 through December 31, 2000
and each December 31, thereafter 1.20 : 1.00
SECTION 6.11 Net Worth. Permit Consolidated Net Worth at any time
to be less than the respective amounts indicated below for the respective
periods indicated below (taken as a single accounting period):
Period Amount
Closing Date through December 31, 1997 Closing Date Net
Worth less $1,000,000
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January 1, 1998 through December 31, 1998 Closing Date Net
Worth plus $4,000,000
January 1, 1999 through December 31, 1999 Closing Date Net
Worth plus $11,500,000
January 1, 2000 through December 31, 2000
and thereafter Closing Date Net
Worth plus $16,500,000
SECTION 6.12 Capital Expenditures. Incur Capital Expenditures in
excess of $10,000,000 in any fiscal year commencing with the fiscal year ending
December 31, 1997.
SECTION 6.13 Business of the Borrower and Subsidiaries. Engage at
any time in any business or business activity other than the business currently
conducted by it and business activities reasonably incidental thereto.
ARTICLE VII
Events of Default
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made by a Loan
Party in or in connection with any Loan Document or the borrowings hereunder, or
any representation, warranty, statement or information contained in any report,
certificate, financial statement or other instrument furnished in connection
with or pursuant to any Loan Document, shall prove to have been false or
misleading in any material respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any
Loan or the reimbursement with respect to any Additional Credit Disbursement
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of any interest on any
Loan or any Fee or any Additional Credit Disbursement or any other amount (other
than an amount referred to in (b) above) due under any Loan Document, when and
as the same shall become due and payable, and such default shall continue
unremedied for a period of five Business Days;
(d) default shall be made in the due observance or performance by
the Borrower or any Subsidiary of any covenant, condition or agreement contained
in Section 5.01(a) or 5.08 or in Article VI;
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(e) default shall be made in the due observance or performance by
the Borrower or any Subsidiary of any covenant, condition or agreement contained
in any Loan Document (other than those specified in (b), (c) or (d) above) and
such default shall continue unremedied for a period of 30 days after notice
thereof from the Administrative Agent or any Bridge Lender to the Borrower;
(f) the Borrower or any Subsidiary shall (A) fail to pay any
principal or interest, regardless of amount, due in respect of any Indebtedness
in a principal amount in excess of $1,000,000 when and as the same shall become
due and payable, or (B) fail to observe or perform any other term, covenant,
condition or agreement contained in any agreement or instrument evidencing or
governing any such Indebtedness if the effect of any failure referred to in this
clause (B) is to cause, or to permit the holder or holders of such Indebtedness
or a trustee on its or their behalf (with or without the giving of notice, the
lapse of time or both) to cause, such Indebtedness to become due prior to its
stated maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of the Borrower or any Subsidiary, or of a substantial
part of the property or assets of the Borrower or any Subsidiary, under Title 11
of the United States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or for a
substantial part of the property or assets of the Borrower or any Subsidiary or
(iii) the winding-up or liquidation of the Borrower or any Subsidiary; and such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
(h) the Borrower or any Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of, or fail to contest in a timely and appropriate
manner, any proceeding or the filing of any petition described in (g) above,
(iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any Subsidiary
or for a substantial part of the property or assets of the Borrower or any
Subsidiary, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take any action for the
purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an
aggregate amount in excess of $1,000,000, which amount is not covered by
insurance (provided that in the event such a judgment is covered by insurance,
the Bridge Lenders are provided with satisfactory evidence that the insurance
provider will provide the coverage relating thereto) shall be rendered against
the Borrower and/or any Subsidiary and the same shall remain undischarged for a
period of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be
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legally taken by a judgment creditor to levy upon assets or properties of the
Borrower or any Subsidiary to enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the reasonable
opinion of the Required Bridge Lenders, when taken together with all other such
ERISA Events, could reasonably be expected to result in liability of the
Borrower or any Subsidiary in an aggregate amount exceeding $1,000,000;
(k) any security interest purported to be created by any Security
Document and to extend to assets that are not immaterial to the Borrower and the
Subsidiaries shall cease to be, or shall be asserted by any Loan Party not to
be, a valid, perfected, first priority (except as otherwise expressly provided
in this Agreement or such Security Document) security interest in the
securities, assets or properties covered thereby, except to the extent that any
such loss of perfection or priority results from the failure of the Collateral
Agent to maintain possession of certificates representing securities pledged
under the Pledge Agreement and except to the extent that such loss is covered by
a lender's title insurance policy and the Collateral Agent is provided with
satisfactory evidence that related insurance provider will provide the coverage
relating thereto; or
(l) any Loan Document shall not be for any reason, or shall be
asserted by any Loan Party not to be, in full force and effect and enforceable
in accordance with its terms;
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent shall, only at the request
of the Required Bridge Lenders, by written notice to the Borrower, take either
or both of the following actions, at the same or different times: (i) terminate
forthwith the Commitments and (ii) declare the Loans then outstanding to be
forthwith due and payable in whole or in part, whereupon the principal of the
Loans so declared to be due and payable, together with accrued interest thereon
and any unpaid Fees and all other liabilities of any Loan Party accrued
hereunder and under any other Loan Document, shall become forthwith due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by the Loan Parties, anything
contained herein or in any other Loan Document to the contrary notwithstanding;
and in any event with respect to the Borrower or any Subsidiary described in
paragraph (g) or (h) above, the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and any unpaid Fees and all other liabilities of the Loan Parties
accrued hereunder and under any other Loan Document, shall automatically become
due and payable, without presentment, demand, protest or any other notice of
any kind, all of which are hereby expressly waived by the Loan Parties,
anything contained herein or in any other Loan Document to the contrary
notwithstanding.
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<PAGE> 56
ARTICLE VIII
The Administrative Agent and the Collateral Agent
In order to expedite the transactions contemplated by this Agreement,
a Bridge Lender or a bank or other financial institution, in each case
designated by the Bridge Lenders and made a party hereto, shall be appointed to
act as Administrative Agent and Collateral Agent on behalf of the Bridge Lenders
(for purposes of this Article VIII, the Administrative Agent and the Collateral
Agent are referred to collectively as the "Agents"). Each of the Bridge Lenders
and each assignee of any such Bridge Lender, hereby irrevocably authorizes the
Agents to take such actions on behalf of such Bridge Lender or assignee and to
exercise such powers as are specifically delegated to the Agents by the terms
and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. The Administrative
Agent is hereby expressly authorized by the Bridge Lenders, without hereby
limiting any implied authority, (a) to receive on behalf of the Bridge Lenders
payments of principal of and interest on the Loans and all other amounts due to
the Bridge Lenders hereunder (other than payments that are specifically
required to be paid directly to a Bridge Lender), and promptly to distribute to
each Bridge Lender its proper share of each payment so received; (b) to give
notice on behalf of each of the Bridge Lenders to the Borrower of any Event of
Default specified in this Agreement of which the Administrative Agent has
actual knowledge acquired in connection with its agency hereunder; and (c) to
distribute to each Bridge Lender copies of all notices, financial statements
and other materials delivered by any Loan Party pursuant to this Agreement or
the other Loan Documents as received by the Administrative Agent. Without
limiting the generality of the foregoing, the Agents are hereby expressly
authorized to execute any and all documents (including releases) with respect
to the Collateral and the rights of the Secured Parties with respect thereto, as
contemplated by and in accordance with the provisions of this Agreement and the
Security Documents.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by any
Loan Party of any of the terms, conditions, covenants or agreements contained in
any Loan Document. The Agents shall not be responsible to the Bridge Lenders
for the due execution, genuineness, validity, enforceability or effectiveness of
this Agreement or any other Loan Documents, instruments or agreements. The
Agents shall in all cases be fully protected in acting, or refraining from
acting, in accordance with written instructions signed by the Required Bridge
Lenders and, except as otherwise specifically provided herein, such instructions
and any action or inaction pursuant thereto shall be binding on all the Bridge
Lenders. Each Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. Neither the Agents nor any of their respective directors, officers,
employees or agents shall have any responsibility to any Loan Party on account
of the failure of or delay in performance or breach by any Bridge Lender of any
of its
51
<PAGE> 57
obligations hereunder or to any Bridge Lender on account of the failure
of or delay in performance or breach by any other Bridge Lender or the Borrower
or any other Loan Party of any of their respective obligations hereunder or
under any other Loan Document or in connection herewith or therewith. Each of
the Agents may execute any and all duties hereunder by or through agents or
employees and shall be entitled to rely upon the advice of legal counsel
selected by it with respect to all matters arising hereunder and shall not be
liable for any action taken or suffered in good faith by it in accordance with
the advice of such counsel.
If any Administrative Agent and Collateral Agent is appointed after
the date of this Agreement, it shall, as a condition to its appointment, enter
into a joinder agreement with, upon such terms as are acceptable to, the parties
hereto and become a party to this Agreement and the Loan Documents.
The Bridge Lenders hereby acknowledge that neither Agent shall be
under any duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement unless it shall be requested in
writing to do so by the Required Bridge Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Bridge
Lenders and the Borrower. Upon any such resignation, the Required Bridge
Lenders shall have the right to appoint a successor, provided that such
appointment shall require the consent of the Borrower (which consent shall not
be unreasonably withheld), so long as no Default or Event of Default shall have
occurred and be continuing. If no successor shall have been so appointed by the
Required Bridge Lenders and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Bridge Lenders, appoint a successor Agent which
shall be a bank with an office in New York, New York, or Detroit, Michigan,
having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor bank, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring Agent shall be
discharged from its duties and obligations hereunder. After the Agent's
resignation hereunder, the provisions of this Article and Section 9.05 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Bridge Lender and may exercise the same as though it were not an
Agent, and the Agents and their Affiliates may accept deposits from, lend money
to and generally engage in any kind of business with, the Borrower or any
Subsidiary or other Affiliate thereof as if it were not an Agent.
Each Bridge Lender agrees (a) to reimburse the Agents, on demand, in
the amount of its pro rata share (based on its Commitments hereunder, or if such
Commitments have expired or been terminated, based on its outstanding Loans) of
any expenses incurred for the benefit of the Bridge Lenders by the Agents,
including counsel fees and compensation of agents and employees
52
<PAGE> 58
paid for services rendered on behalf of the Bridge Lenders, that are required
to be but shall not have been reimbursed by the Borrower and (b) to indemnify
and hold harmless each Agent and any of its directors, officers, employees or
agents, on demand, in the amount of such pro rata share, from and against any
and all liabilities, taxes, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted against it in its
capacity as Agent or any of them in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or omitted by it or
any of them under this Agreement or any other Loan Document, to the extent the
same are required to be but shall not have been reimbursed by the Borrower or
any other Loan Party, provided that no Bridge Lender shall be liable to an
Agent or any such other indemnified person for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements that resulted from the gross
negligence or wilful misconduct of such Agent or any of its directors,
officers, employees or agents.
Each Bridge Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Bridge Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bridge Lender also acknowledges
that it will, independently and without reliance upon the Agents or any other
Bridge Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement or any other Loan Document, any
related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01 Notices. Notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as
follows:
(a) if to the Borrower or any Subsidiary Guarantor, to it at 275
Rex Boulevard, Auburn Hills, MI 48326, Attention of President (Telecopy No.
810-299-1008) with a copy to the Attention of General Counsel, (Telecopy No.
810-299-1008).
(b) if to a Bridge Lender, to it at its address (or telecopy
number) set forth on Schedule 2.01.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or when receipt is acknowledged if sent by telecopy or on the date five Business
Days after dispatch by certified or registered mail if mailed, in each case
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<PAGE> 59
delivered, sent or mailed (properly addressed) to such party as provided in this
Section 9.01 or in accordance with the latest unrevoked direction from such
party given in accordance with this Section 9.01.
SECTION 9.02 Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Bridge Lenders shall survive the making by the
Bridge Lenders of the Loans, regardless of any investigation made by the Bridge
Lenders on their behalf, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any Fee or any other
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid and so long as the Commitments have not been terminated. The
provisions of Sections 9.05 and 9.15 shall remain operative and in full force
and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Administrative
Agent, the Collateral Agent or any Bridge Lender.
SECTION 9.03 Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower and the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns.
SECTION 9.04 Successors and Assigns.
(a) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the permitted successors
and assigns of such party; and all covenants, promises and agreements by or on
behalf of the Borrower, the Administrative Agent or the Bridge Lenders that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
(b) Each Bridge Lender may assign to one or more assignees all or
a portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it); provided, however, that except in the case of an assignment to a Bridge
Lender or, in the case of CVC, to 399 Venture Partners Inc., the other Bridge
Lenders must give their prior written consent to such assignment (which consent
shall not be unreasonably withheld), and the parties to each such assignment
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance in the form attached hereto as Exhibit F (the "Assignment and
Acceptance").
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<PAGE> 60
(c) The Administrative Agent shall maintain at one of its offices
in The City of New York a copy of each Assignment and Acceptance delivered to it
and a register for the recordation of the names and addresses of the Bridge
Lenders, and the Commitments of, and principal amount of the Loans owing to,
each Bridge Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive and the Loan
Parties, the Administrative Agent, the Collateral Agent and the Bridge Lenders
shall treat each person whose name is recorded in the Register pursuant to the
terms hereof as a Bridge Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Loan Parties, the Collateral Agent and any Bridge Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Any Bridge Lender may, in connection with any assignment or
proposed assignment pursuant to this Section 9.04, disclose to the assignee or
proposed assignee any information relating to the Borrower furnished to such
Bridge Lender by or on behalf of the Borrower provided that, prior to any such
disclosure of information, each such assignee or proposed assignee shall execute
an agreement in the form of Exhibit G.
(e) Neither the Borrower nor any other Loan Party shall assign or
delegate any of its rights or duties hereunder without the prior written consent
of each Bridge Lender, and any attempted assignment without such consent shall
be null and void.
SECTION 9.05 Expenses; Indemnity.
(a) The Borrower agrees to pay all reasonable out-of-pocket
expenses incurred by the Administrative Agent, the Collateral Agent and the
Bridge Lenders in connection with the preparation and administration of this
Agreement and the other Loan Documents or in connection with any amendments,
modifications or waivers of the provisions hereof or thereof or incurred by the
Administrative Agent, the Collateral Agent or any Bridge Lender in connection
with the enforcement or protection of its rights in connection with this
Agreement and the other Loan Documents or in connection with the Loans made
hereunder, including the reasonable fees, charges and disbursements of counsel
for the Administrative Agent and the Collateral Agent, and, in connection with
any such enforcement or protection, the reasonable fees, charges and
disbursements of any other counsel for the Administrative Agent, the Collateral
Agent or any Bridge Lender.
(b) The Borrower agrees to indemnify the Administrative Agent,
the Collateral Agent and each Bridge Lender, each Affiliate of any of the
foregoing persons and each of their respective directors, trustees, officers,
employees and agents (each such person being called an "Indemnitee") against,
and to hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees, charges and
disbursements, incurred by or asserted against any lndemnitee arising out of, in
any way connected with, or as a result of (i) any claim, litigation,
investigation or proceeding, whether or not any Indemnitee is a party thereto,
relating to the execution or delivery of this Agreement or any other Loan
Document or any agreement or instrument contemplated thereby, the performance by
the
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<PAGE> 61
parties thereto of their respective obligations thereunder, the consummation
of the Transactions and the other transactions contemplated thereby or the use
of the proceeds of the Loans or (ii) any actual or alleged presence or Release
of Hazardous Materials on any property owned or operated by the Borrower or any
of the Subsidiaries, or any Environmental Claim related in any way to the
Borrower or the Subsidiaries; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) The provisions of this Section 9.05 shall remain operative
and in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the invalidity
or unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Administrative Agent,
the Collateral Agent or any Bridge Lender. All amounts due under this Section
9.05 shall be payable on written demand therefor.
SECTION 9.06 Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.07 Waivers; Amendment.
(a) No failure or delay of the Administrative Agent, the
Collateral Agent or any Bridge Lender in exercising any power or right hereunder
or under any other Loan Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Administrative Agent or the Collateral Agent and the
Bridge Lenders hereunder and under the other Loan Documents are cumulative and
are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or any other Loan Document or consent
to any departure by any Loan Party therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Bridge Lenders.
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SECTION 9.8 Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan
or participation in any Additional Credit Disbursement, together with all fees,
charges and other amounts which are treated as interest or loan charges on such
Loan under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by the Bridge Lender holding such Loan or participation in
accordance with applicable law, the rate of interest payable in respect of such
Loan or participation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan or
participation but were not payable as a result of the operation of this Section
9.09 shall be cumulated and the interest and Charges payable to such Bridge
Lender in respect of other Loans or participations or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at the Prime Rate to the date of
repayment, shall have been received by such Bridge Lender.
SECTION 9.09 Entire Agreement. This Agreement, the other Loan
Documents and the confidentiality agreements previously signed by the Bridge
Lenders constitute the entire contract between the parties relative to the
subject matter hereof. Any other previous agreement among the parties with
respect to the subject matter hereof is superseded by this Agreement and the
other Loan Documents. Nothing in this Agreement or in the other Loan Documents,
expressed or implied, is intended to confer upon any party other than the
parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.
SECTION 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.10.
SECTION 9.11 Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in
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<PAGE> 63
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9.12 Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.13 Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.14 Consent to Service of Process.
Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.15 Confidentiality. The Administrative Agent, the
Collateral Agent and each of the Bridge Lenders agrees to keep confidential and
not to publish, disclose or otherwise divulge (and to cause its respective
officers, directors, employees, agents and representatives to keep confidential
and not publish, disclose or otherwise divulge) the Information (as defined
below), except that the Administrative Agent, the Collateral Agent or any Bridge
Lender shall be permitted to disclose Information (a) to such of its respective
officers, directors, employees, agents, affiliates and representatives
(including counsel) as need to know such Information (who will be informed of
the confidential nature of the Information), (b) to the extent otherwise
required by applicable laws and regulations or by any subpoena or similar legal
process, or requested by any regulatory authority (in any which event notice
thereof will be provided to the Borrower and the applicable party to the extent
not prohibited by applicable law), (c) in connection with any suit, action or
proceeding relating to the enforcement of its rights hereunder or under the
other Loan Documents or (d) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section 9.15 or (ii)
becomes available, or was available, to the Administrative Agent, any Bridge
Lender or the Collateral Agent on a nonconfidential basis from a source other
than the Borrower or any of its affiliates and such source is not bound by a
confidentiality agreement to the Borrower and is not otherwise prohibited from
transmitting the information to a third party. For the purposes of this
Section, the term "Information" shall mean all financial statements,
certificates, reports, agreements and information (including all analyses,
compilations and studies prepared by the Administrative Agent, the Collateral
Agent or any Bridge Lender based on any of the foregoing) that are received from
the Borrower or any of its affiliates or representatives and related to the
Borrower or any of its affiliates, any shareholder of the Borrower or any
employee,
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<PAGE> 64
customer or supplier of the Borrower or any of its affiliates, other
than any of the foregoing that were available to the Administrative Agent, the
Collateral Agent or any Bridge Lender on a nonconfidential basis prior to its
disclosure thereto by the Borrower. The provisions of this Section 9.15 shall
remain operative and in full force and effect regardless of the expiration and
term of this Agreement.
59
<PAGE> 65
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
MSX INTERNATIONAL, INC.
as Borrower
By: /s/ Frederick K. Minturn
--------------------------------
Name: Frederick K. Minturn
Title: President
CITICORP VENTURE CAPITAL, LTD.,
as Bridge Lender
By: /s/ Michael A. Delaney
--------------------------------
Name: Michael A. Delaney
Title: Vice President
MASCOTECH, INC.,
as Bridge Lender
By: /s/ Timothy Wadhams
--------------------------------
Name: Timothy Wadhams
Title: Vice President
[Signature Page to Bridge Credit Agreement]
<PAGE> 66
SCHEDULE I
<PAGE> 67
Schedule I
to the Bridge Credit
Agreement
U.K. Credit Facilities
National Westminster Bank PLC Pound 2 million
NBD Bank Pound 2 million
<PAGE> 68
SCHEDULE 2.01
<PAGE> 69
Schedule 2.01
to the Bridge Credit
Agreement
Commitments
Term Loan Revolving Credit
Bridge Lender Commitment Commitment
Citicorp Venture Capital, Ltd. $20,000,000.00 $30,000,000.00
399 Park Avenue - 14th Floor
New York, NY 10043
Telecopy No. 212-559-1000
Att: Michael A. Delaney
MascoTech, Inc. $20,000,000.00 $30,000,000.00
21001 Van Born Road
Taylor, MI 48180
Telecopy No. 313-374-6430
Attention: President
with a copy to
Attention: General Counsel
<PAGE> 70
SCHEDULE 2.15
<PAGE> 71
Schedule 2.15
to the Bridge Credit
Agreement
Designated Guarantee Obligations and Letters of Credit
1. Obligations under Continuing Guaranty and Indemnity for International
Credits dated December 22, 1994 and Letter Amendment, dated March 22,
1996 and January 2, 1997, to the First National Bank of Chicago with
respect to MSX International in the amount of Pound 2 million.
2. Guarantee of National Westminster Bank Plc credit facility Pound 1.6
million.
<PAGE> 72
SCHEDULE 3.06
<PAGE> 73
Schedule 3.06
to the Bridge Credit
Agreement
Exceptions to Performance
None.
<PAGE> 74
SCHEDULE 3.07
<PAGE> 75
Schedule 3.07
to the Bridge Credit
Agreement
Ownership of Subsidiaries
Subsidiary Shareholder Ownership Interest (%)
MSX International (Holdings), MSX International, Inc. 100%
Inc. ("MSX (Holdings)")
MSX International Business MSX (Holdings) 100%
Services, Inc.
MSX International Engineering MSX(Holdings) 100%
Services, Inc.
MSX International (USA), Inc. MSX (Holdings) 100%
("MSX (USA)")
MSX International Holdings MSX (Holdings) 100%
Limited ("Limited")
MSX International Limited ("MSX Limited 100%
Limited")
MascoTech Engineering GmbH MSX (Limited) 100%
MascoTech Ingenierie MSX (Limited) 100%*
SARL
Canewdon Consultants Limited MSX (Limited) 100%**
Canewdon Consultants (USA) Inc. MSX (Limited) 100%
* 1/100 part registered in the name of John Bignall.
** One share registered collectively in the names of MSX (Limited) and
Messrs. Cushing and Hawes.
<PAGE> 76
SCHEDULE 3.08
<PAGE> 77
Schedule 3.08
to the Bridge Credit
Agreement
Litigation
None
<PAGE> 78
SCHEDULE 3.13
<PAGE> 79
Schedule 3.13
to the Bridge Credit
Agreement
Environmental Matters
None
<PAGE> 80
SCHEDULE 3.16
<PAGE> 81
Schedule 3.16
to the Bridge Credit
Agreement
Leased Real Property
1. See Section 1.01(a)(i) of the Disclosure Schedule to the Business
Services Acquisition Agreement, dated January 3, 1997 by and between
MSX International, Inc., a Michigan corporation, and MSX International
Business Services, Inc., a Delaware corporation.
2. See Section 1.01(a)(i) of the Disclosure Schedule to the Engineering
Services Acquisition Agreement, dated January 3, 1997 by and between
MSX International, Inc., a Michigan corporation, and MSX International
Engineering Services, Inc., a Delaware corporation.
3. Foreign leases:
A. See Section 6.10 of the Disclosure Schedule to the Acquisition
Agreement ("Acquisition Agreement") by and among MascoTech,
Inc., MSX International, Inc., a Michigan corporation, and ASG
Holdings Inc., a Delaware corporation (now known as MSX
International, Inc.) Dated as of November 12, 1996, as amended
by Amendment No. 1 dated as of January 3, 1997.
B. See Schedule 1.1(a) of the Disclosure Schedule to the APX
Business Purchase Agreement (the "APX Business Purchase
Agreement"), dated as of November 6, 1996, among MSX
International, Inc., a Michigan Corporation, Pioneer
Acquisition Corporation, a Michigan corporation, Landmark
Holdings, Inc., a Michigan corporation, Aero-Detroit, Inc., a
Michigan corporation, TAD Technical Services Ltd., an English
limited company, APX International (Europe), Ltd., an English
limited company and TAD Resources International, Inc., a
Massachusetts corporation.
<PAGE> 82
SCHEDULE 6.01
<PAGE> 83
Schedule 6.01
to the Bridge Credit
Agreement
Indebtedness
1. Promissory Note for $20,516,241.35, dated January 3, 1997, issued to
MSX International (Holdings), Inc. by MSX International Limited.
2. Indebtedness arising under the Bridge Credit Agreement and Loan
Documents.
3. Promissory Note for $30,000,000.00, dated January 3, 1997, issued to
MascoTech by the Borrower.
4. Indebtedness arising under the Senior Subordinated Note Purchase
Agreement, dated January 3, 1997, by and between the Borrower and
MascoTech.
5. Loan in the amount of FF 200,000, dated August 17,1994, from MSX
International Limited to MascoTech Engineering SARL.
6. Schedule I to the Bridge Credit Agreement is incorporated herein.
7. Indebtedness arising out of the Letter Agreement, dated January 3,
1997, by and between Borrower and NBD Bank.
8. Interest payments of approximately $1,952,000 owed to MascoTech GmbH.
<PAGE> 84
SCHEDULE 6.02
<PAGE> 85
Schedule 6.02
to the Bridge Credit
Agreement
Liens
1.
<TABLE>
<CAPTION>
DEBTOR CREDITOR COLLATERAL DATE UCC NO.
MICHIGAN - SECRETARY OF STATE
<S> <C> <C> <C> <C>
MascoTech Automotive AT&T Credit computer equipment 6/6/96 72301B
Systems Group, Inc. Corporation (leased)
MascoTech Automotive General Electric computer equipment 8/15/96 75533B
Systems Group, Inc. Capital Computer
Leasing Corporation
MascoTech Automotive General Motors automotive parts 5/26/94 C846421
Systems Group, Inc. Corporation Service bearing any "GM"
(d/b/a MascoTech Special Parts Operations trademark
Vehicles)
MascoTech Auto Systems Sanwa Leasing 5 Dell pentium 1/4/96 D048939
Group Corporation computers
MascoTech Auto Systems Sanwa Leasing computer equipment 7/10/96 D115859
Group Corporation
MascoTech Auto Systems Sanwa Leasing computer equipment 8/13/96 D127714
Group Corporation
MascoTech Automotive Sharp Electronic 2 copier systems 4/7/95 54553B
Systems Group, Inc. Credit Co. (leased)
MascoTech Automotive USL Capital computer equipment 12/28/93 38441B
Systems Corporation
MascoTech Marketing XEROX Corporation 1 Xerox machine 7/7/93 58119B
MascoTech Marketing Pitney Bowes Credit equipment subject to 9/7/94 C881536
Services Corporation lease #5181680-301
dated 6/24/94
MascoTech Technical AT&T Capital Services Computers and related 8/2/95 and 5892B;
Services Corporation equipment subject to amended amended
lease dated 7/25/95. 12/18/95 64813B
Amendment added
additional equipment
</TABLE>
<PAGE> 86
<TABLE>
<CAPTION>
DEBTOR CREDITOR COLLATERAL DATE UCC NO.
<S> <C> <C> <C> <C>
MascoTech Technical AT&T Capital Services 1 computer (located at 11/27/95 63635B
Services Corporation 12220 E. 13 Mile Rd)
subject to lease dated
11/10/95
MascoTech Training & AT&T Capital Services 4 IBM computers 6/2/95 56780B
Visual Services Corporation subject to lease dated
5/19/59
<CAPTION>
MICHIGAN - OAKLAND COUNTY
<S> <C> <C> <C> <C>
MascoTech Technical AT&T Capital Services computers and related 8/2/95 95-05881
Services Corporation equipment subject to
lease dated 7/25/95
<CAPTION>
MISSOURI - SECRETARY OF STATE
<S> <C> <C> <C> <C>
MascoTech Special Hawkeye Leasing 3 forklifts 3/18/96 2643395
Vehicles Corporation
<CAPTION>
VIRGINIA - CORPORATIONS COMMISSION
<S> <C> <C> <C> <C>
[MascoTech Automotive Homestead Materials Boom lift 10/23/95 7205]
Systems Group, Inc. Handling Co.
</TABLE>
2. Liens listed on Schedule 3.1(a)(ii) to the APX Business Purchase
Agreement and the additional liens listed below:
Michigan filings in favor of Bay Bank: D137112
D138429
D138430
Michigan filings in favor of Citizens: D147157
Massachusetts filings in favor of Citizens: 421826
3. Liens in favor of NBD and its assignees established pursuant to the
Letter Agreement dated as of January 3, 1997.
<PAGE> 87
SCHEDULE 6.04
<PAGE> 88
Schedule 6.04
to the Bridge Credit
Agreement
Intercompany Indebtedness
1. Schedule 6.01 hereto is incorporated herein.
2. Intercompany Indebtedness
MEEL loans to employees:
<TABLE>
<CAPTION>
Capital Sum Balance as at
Employee Name (Pounds) Start Date Term 7/30/96
- ------------- ----------- ---------- --------- -------------
<S> <C> <C> <C> <C>
Claine R 300.00 1-31-96 12 months 125.00
Clifton C 3,000.00 3-31-95 20 months 450.00
Huff M 300.00 6-27-95 No repayment
details notes.
Initial period 35
days
Leaver J 1,500.00 1-31-96 12 months 625.00
Mackintosh D 260.00 2-29-96 13 months 140.00
Palmer L 2,000.00 1-31-95 24 months 416.73
Palmer L 300.00 11-15-94 No repayment
details noted.
Initial period 78
days.
Parrott M 260.00 2-29-96 13 months 140.00
Rix J 500.00 10-31-95 12 months 83.33
Saxby S 260.00 2-29-96 13 months 140.00
Whiting O 260.00 2-29-96 13 months 140.00
Overy J 3,200.00 9-30-96 17 months 3,200.00
Morris A 200.00 8-31-96 4 months 200.00
</TABLE>
<PAGE> 89
MascoTech Limited
- MascoTech Limited loan to Collin Cushing in the original amount of
85,000 (Pounds.).
GmbH
GmbH loan to employee:
<TABLE>
<CAPTION>
Employee Name Amount Start Date Term Balance
------------- ------ ---------- ---- -------
<S> <C> <C> <C> <C>
Milica Mehovic DM 2,000.00 6-3-96 4 months DM 1,500.00
</TABLE>
<PAGE> 90
SCHEDULE 6.07
<PAGE> 91
Schedule 6.07
to the Bridge Credit
Agreement
1. Schedule 6.01 Indebtedness is incorporated herein, excluding the
indebtedness to bank section.
<PAGE> 92
- - Borrower leases motor vehicles under a confidential lease
agreement between ARI Leasing and MascoTech, Inc. Schedule of
leases previously provided to Buyer.
- - Tranpsortation Program Contracts coordinated and/or provided
by MascoTech, Inc. or Masco Corporation are used by the
business during the calendar year 1995.
- - National Purchasing Agreements coordinated and/or provided by
MascoTech, Inc. or Masco Corporation are used for the
following vendors:
Alro Steel Corporation
American International, Inc.
AT&T
AV Systems
Cellular One
Contract Interiors/Steelcase
CDP Imaging Systems/Panasonic
Governor Computer Supply
Grainger
Graybar Electric
Hewlett Packard
Inecamp
IBM
Marvel Group, Inc.
Safety Supply America
Sharp Electronics Corp.
Staples Business Advantage
Stream International
Sun Microsystems
Ultramax/SKJ
- - Borrower subleases a portion of its 255 Rex Boulevard to
Saturn and also has an occupancy arrangement with Titan Wheel.
- - Part of 275 Rex Boulevard, Auburn Hills, is used by
non-business employees and Borrower allocates cost to MascoTech, Inc.
- - Part of 255 Rex Boulevard rent is paid for by MascoTech, Inc.
<PAGE> 93
Intercompany Indebtedness
MEEL loans to employees:
<TABLE>
<CAPTION>
Capital Sum Balance as at
Employee Name (Pounds) Start Date Term 7/30/96
- ------------- ----------- ---------- --------- -------------
<S> <C> <C> <C> <C>
Claine R 300.00 1-31-96 12 months 125.00
Clifton C 3,000.00 3-31-95 20 months 450.00
Huff M 300.00 6-27-95 No repayment
details notes.
Initial period 35
days
Leaver J 1,500.00 1-31-96 12 months 625.00
Mackintosh D 260.00 2-29-96 13 months 140.00
Palmer L 2,000.00 1-31-95 24 months 416.73
Palmer L 300.00 11-15-94 No repayment
details noted.
Initial period 78
days.
Parrott M 260.00 2-29-96 13 months 140.00
Rix J 500.00 10-31-95 12 months 83.33
Saxby S 260.00 2-29-96 13 months 140.00
Whiting O 260.00 2-29-96 13 months 140.00
Overy J 3,200.00 9-30-96 17 months 3,200.00
Morris A 200.00 8-31-96 4 months 200.00
</TABLE>
MascoTech Limited
- MascoTech Limited loan to Collin Cushing in the original amount of
85,000 (Pounds).
GmbH loan to employee:
<PAGE> 94
<TABLE>
<CAPTION>
Employee Name Amount Start Date Term Balance
<S> <C> <C> <C> <C>
Milica Mehovic DM 2,000.00 6-3-96 4 months DM 1,500.00
</TABLE>
<PAGE> 95
EXHIBIT A
<PAGE> 96
EXHIBIT A
to the Bridge Credit
Agreement
FORM OF BORROWING REQUEST
Citicorp Venture Capital, Ltd.
399 Park Avenue - 14th Floor
New York, New York 10043
Attention:
MascoTech, Inc.
21001 Van Born Road
Taylor, Michigan 48180
Attention:
Gentlemen:
Reference is hereby made to the Bridge Credit Agreement dated as of
January __, 1997 (the "Bridge Credit Agreement"), among MSX INTERNATIONAL,
INC., (the "Borrower") and the lenders from time to time party thereto (the
"Bridge Lenders"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Bridge Credit
Agreement. The undersigned Borrower hereby gives you notice pursuant to
Section 2.02 of the Bridge Credit Agreement that it requests a Borrowing under
the Bridge Credit Agreement, and in that connection sets forth below the terms
on which such Borrowing is requested to be made:
(A) Type of Borrowing: Revolving Credit Borrowing
(B) Date of Borrowing
(which is a Business Day) ___________________
<PAGE> 97
(D) Principal Amount of Borrowing (1) _______________________
(E) Funds are requested to be disbursed to the account in the name of
Borrower, NBD Bank, Detroit, MI (Account No. ), ABA 072000326.
Upon acceptance of any or all of the Loans offered by the Bridge
Lenders in response to this request, the Borrower shall be deemed to have
represented and warranted that the conditions to lending specified in Sections
4.01(b) and (c) of the Bridge Credit Agreement have been satisfied.
MSX INTERNATIONAL, INC.
By:_________________________________
Name:
Title:
__________________________________
(1) Not less than $5,000,000 and, in each case, in an integral multiple of
$1,000,000, but in any event not exceeding the aggregate amount of the Revolving
Credit Commitment available at such time.
<PAGE> 98
EXHIBIT B
INTENTIONALLY OMITTED
<PAGE> 99
EXHIBIT C
INTENTIONALLY OMITTED
<PAGE> 100
EXHIBIT D
INTENTIONALLY OMITTED
<PAGE> 101
EXHIBIT E
INTENTIONALLY OMITTED
<PAGE> 102
EXHIBIT F
<PAGE> 103
EXHIBIT F
to the Bridge Credit
Agreement
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Bridge Credit Agreement dated as of January __,
1997 (the "Bridge Credit Agreement"), among MSX INTERNATIONAL, INC., a Delaware
corporation (the "Borrower"), and the lenders from time to time party thereto
(the "Bridge Lenders"). Terms defined in the Bridge Credit Agreement are used
herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below (but not prior
to the registration of the information contained herein in the Register pursuant
to Section 9.04(c) of the Bridge Credit Agreement), the interest set forth below
in the Assignor's interest, rights and obligations under the Bridge Credit
Agreement and the other Loan Documents. From and after the Effective Date (i)
the Assignee shall be a party to and be bound by the provisions of the Bridge
Credit Agreement and, to the extent of the interests assigned by this Assignment
and Acceptance, have the rights and obligations of a Bridge Lender thereunder
and under the Loan Documents and (ii) the Assignor shall, to the extent of the
interests assigned by this Assignment and Acceptance, relinquish its rights and
be released from its obligations under the Bridge Credit Agreement.
2. This Assignment and Acceptance is being delivered to each of the
Borrower and the Bridge Lenders, together with, if the Assignee is not already a
Bridge Lender under the Bridge Credit Agreement, an Administrative Questionnaire
in the form of Exhibit G to the Bridge Credit Agreement.
3. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address and Telecopy Number for Notices:
<PAGE> 104
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the date of execution
of this Assignment and Acceptance):
<TABLE>
<S> <C> <C> <C>
(1) (2) (3) (4)
Facility Principal Amount of Principal Amount Percentage Assigned
Commitment**/ of Commitment of Commitment (in
or outstanding Loans***/ (in the case of the the case of the
Revolving Credit Revolving Credit
Commitments) or Commitments) or
outstanding Loans outstanding Loans
(in the case of (in the case of
Term Loans) Term Loans)
Assigned****/ on the Effective Date***
Term Loan $ $ %
Revolving Credit $ $ %
</TABLE>
__________________________________
**/With respect to the Revolving Credit Commitments and calculated after giving
effect to all assignments of the Revolving Credit Commitments that will be
effective prior to the Effective Date.
***/With respect to the Term Loans and calculated after giving effect to all
assignments of the Term Loans that will be effective prior to the Effective
Date.
****/If the Revolving Credit Commitments or outstanding Term Loans are reduced
prior to the Effective Date, [(a) the amount set forth in column (3) with
respect thereto to shall remain unchanged and (b) the percentage set forth in
column (4) with respect thereto shall be increased to the fraction (represented
by a percentage) equal to (x) the amount set forth in column (3) with respect
thereto over (y) the principal amount of such Commitments or such outstanding
Term Loans as are in effect on the Effective Date] [(a) the percentage set
forth in column (4) with respect to such Commitments or such outstanding Term
Loans shall remain unchanged and (b) the amount set forth in column (3) with
respect to such Commitments or such outstanding Term Loans shall be reduced to
the product of (x) the percentage set forth in column (4) with respect to
Commitments or such outstanding Term Loans as are in effect on the Effective
Date].
<PAGE> 105
[[Amount][Percentage] Assigned of Fees Accrued (from and including the date
hereof to but not including the Effective Date)(optional):]
<PAGE> 106
<TABLE>
<S> <C>
The terms set forth above are hereby agreed to Consented to by:
by
_______________________, as Assignor MSX INTERNATIONAL, INC.,
Borrower
By:_______________________________ By:___________________________
Name: Name:
Title: Title:
______________________, as Assignee. CITICORP VENTURE CAPITAL, LTD.,
Bridge Lender
By:______________________________ By:__________________________
Name: Name:
Title: Title:
MASCOTECH, INC.
Bridge Lender
By:___________________________
Name:
Title:
</TABLE>
<PAGE> 107
EXHIBIT G
<PAGE> 108
EXHIBIT G
to the Bridge Credit Agreement
FORM OF
ADMINISTRATIVE QUESTIONNAIRE
Please accurately complete the following information and return via Telecopy to
the attention of ______________ at _______________ as soon as possible, at
Telecopy No. ____________.
______________________________________________________________________________
LENDER'S LEGAL NAME TO APPEAR IN DOCUMENTATION:
______________________________________________________________________________
GENERAL INFORMATION - DOMESTIC LENDING OFFICE:
Institution Name:____________________________________________________________
Street Address: ____________________________________________________________
City, State, Zip Code:_______________________________________________________
POST-CLOSING, ONGOING CREDIT CONTACTS/NOTIFICATION METHODS:
CREDIT CONTACTS:
Primary Contact:____________________________________________________________
Street Address: ____________________________________________________________
City, State, Zip Code:______________________________________________________
Phone Number: ____________________________________________________________
Telecopy Number: ____________________________________________________________
Backup Contact:: ____________________________________________________________
<PAGE> 109
Street Address: ____________________________________________________________
City, State, Zip Code:_______________________________________________________
Phone Number: ____________________________________________________________
Telecopy Number: ____________________________________________________________
TAX WITHHOLDING:
Nonresident Alien _______Y* ______N
*Form 4224, 1001 or W-8 (with the certificate required by 2.20(e)) Enclosed
Tax ID Number ___________________
POST-CLOSING, ONGOING ADMINISTRATIVE CONTACTS/NOTIFICATION METHODS:
ADMINISTRATIVE CONTACTS - BORROWING, PAYDOWNS, ETC.
Contact: ____________________________________________________________________
Street Address: ____________________________________________________________
City, State, Zip Code:_______________________________________________________
Phone Number: ____________________________________________________________
Telecopy Number: ____________________________________________________________
PAYMENT INSTRUCTIONS:
Name of Bank to which funds are to be transferred:
______________________________________________________________________________
Routing Transit/ABA number of Bank to which funds are to be transferred:
_______________________________________________________________________________
<PAGE> 110
Name of Account, if applicable:
______________________________________________________________________________
Account Number: ____________________________________________________________
Additional Information:______________________________________________________
MAILINGS:
Please specify the person to whom the Borrower should send financial information
and compliance information received subsequent to the closing (if different from
primary credit contact):
Name:________________________________________________________________________
Street Address: ____________________________________________________________
City, State, Zip Code:_______________________________________________________
It is very important that all the above information be accurately completed and
that this questionnaire be returned to the person specified in the introductory
paragraph of this questionnaire as soon as possible. If there is someone other
than yourself who should receive this questionnaire, please notify us of that
person's name and telecopy number and we will telecopy a copy of the
questionnaire. If you have any questions about this form, please call
___________________.
<PAGE> 1
EXHIBIT 11
MASCOTECH, INC.
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
PRIMARY AND FULLY DILUTED
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
-----------------------------------
1996 1995 1994
------- ------- ---------
<S> <C> <C> <C>
PRIMARY:
Income (loss) from continuing operations before
extraordinary item and cumulative effect of accounting
change, net............................................... $39,920 $59,190 $(234,420)
Preferred stock dividends................................... 12,960 12,960 12,960
------- ------- ---------
Earnings (loss) for computing primary earnings (loss) from
continuing operations per common share before
extraordinary item and cumulative effect of accounting
change, net............................................... 26,960 46,230 (247,380)
Gain on disposition of discontinued operations.............. -- -- 11,700
------- ------- ---------
Earnings (loss) for computing primary earnings (loss) per
common share before extraordinary item and cumulative
effect of accounting change, net.......................... 26,960 46,230 (235,680)
Extraordinary item.......................................... -- -- 2,600
Cumulative effect of accounting change, net................. 11,700 -- --
------- ------- ---------
Earnings (loss) attributable to common stock................ $38,660 $46,230 $(233,080)
======= ======= =========
Weighted average number of common shares outstanding during
each period............................................... 52,360 56,190 58,910
Addition from assumed exercise of stock options and warrants
(1)....................................................... 1,430 860 --
Addition from assumed conversion of preferred stock (2)..... -- -- --
------- ------- ---------
Weighted average number of common shares and equivalents
outstanding during each period -- without dilution........ 53,790 57,050 58,910
======= ======= =========
Primary earnings (loss) per common share:
Continuing operations..................................... $ .50 $ .81 $ (4.20)
Gain on disposition of discontinued operations............ -- -- .20
------- ------- ---------
Income (loss) before extraordinary item and cumulative
effect of accounting change, net........................ .50 .81 (4.00)
Extraordinary item........................................ -- -- .04
Cumulative effect of accounting change, net............... .22 -- --
------- ------- ---------
Net income (loss)......................................... $ .72 $ .81 $ (3.96)
======= ======= =========
FULLY DILUTED:
Income (loss) from continuing operations before
extraordinary item and cumulative effect of accounting
change, net............................................... $39,920 $59,190 $(234,420)
Preferred stock dividends................................... 12,960 12,960 12,960
Add after-tax convertible debenture related expenses........ 9,530 9,530 9,520
------- ------- ---------
Earnings (loss) for computing fully diluted earnings (loss)
from continuing operations per common share before
extraordinary item and cumulative effect of accounting
change, net............................................... 36,490 55,760 (237,860)
Gain on disposition of discontinued operations.............. -- -- 11,700
------- ------- ---------
Earnings (loss) for computing fully diluted earnings (loss)
per common share before extraordinary item and cumulative
effect of accounting change, net.......................... 36,490 55,760 (226,160)
Extraordinary item.......................................... -- -- 2,600
Cumulative effect of accounting change, net................. 11,700 -- --
------- ------- ---------
Earnings (loss) attributable to common stock, as adjusted... $48,190 $55,760 $(223,560)
======= ======= =========
Weighted average number of common shares outstanding during
each period............................................... 52,360 56,190 58,910
Addition from assumed conversion of convertible
debentures................................................ 10,000 10,000 10,090
Addition from assumed exercise of stock options and
warrants.................................................. 2,770 880 3,340
Addition from assumed conversion of preferred stock......... 10,800 10,800 10,800
------- ------- ---------
Weighted average number of common shares and equivalents
outstanding during each period -- fully diluted basis..... 75,930 77,870 83,140
======= ======= =========
Fully diluted earnings (loss) per common share (3):
Continuing operations..................................... $ .49 $ .81 $ (4.20)
Gain on disposition of discontinued operations............ -- -- .20
------- ------- ---------
Income (loss) before extraordinary item and cumulative
effect of accounting change, net........................ .49 .81 (4.00)
Extraordinary item........................................ -- -- .04
Cumulative effect of accounting change, net............... .21 -- --
------- ------- ---------
Net income (loss)......................................... $ .70 $ .81 $ (3.96)
======= ======= =========
</TABLE>
(1) The effect of options and warrants conversions in 1994 would be
anti-dilutive.
(2) The effect of preferred stock conversions in 1996, 1995 and 1994 would be
anti-dilutive.
(3) The results of assumed conversion of convertible debentures and preferred
stock in 1996 are anti-dilutive and therefore are excluded. Amounts for 1995
and 1994 agree to primary earnings (loss) per common share amounts since the
results of assumed conversion of securities are anti-dilutive.
<PAGE> 1
EXHIBIT 12
MASCOTECH, INC.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
--------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
EARNINGS (LOSS) BEFORE INCOME
TAXES AND FIXED CHARGES:
Income (loss) from continuing
operations before income taxes
(credit), extraordinary item and
cumulative effect of accounting
change, net........................ $ 77,220 $100,280 $(264,490) $121,180 $ 68,250
Deduct equity in undistributed
earnings of less-than-fifty-percent
owned companies.................... (31,650) (29,590) (23,350) (19,930) (21,760)
Add interest on indebtedness, net..... 30,350 51,500 51,290 83,000 87,830
Add amortization of debt expense...... 1,490 1,670 3,450 4,390 1,930
Estimated interest factor for
rentals............................ 6,350 7,070 6,220 5,550 5,740
-------- -------- --------- -------- --------
Earnings (loss) before income taxes
and fixed charges.................. $ 83,760 $130,930 $(226,880) $194,190 $141,990
======== ======== ========= ======== ========
FIXED CHARGES:
Interest on indebtedness, net......... $ 30,590 $ 51,690 $ 51,540 $ 83,110 $ 87,980
Amortization of debt expense.......... 1,490 1,670 3,450 4,390 1,930
Estimated interest factor for
rentals............................ 6,350 7,070 6,220 5,550 5,740
-------- -------- --------- -------- --------
Total fixed charges................ 38,430 60,430 61,210 93,050 95,650
-------- -------- --------- -------- --------
Preferred stock dividend requirement
(a)................................ 21,570 21,970 14,630 25,860 17,140
-------- -------- --------- -------- --------
Combined fixed charges and preferred
stock dividends.................... $ 60,000 $ 82,400 $ 75,840 $118,910 $112,790
======== ======== ========= ======== ========
RATIO OF EARNINGS TO FIXED CHARGES...... 2.2 2.2 --(b) 2.1 1.5
======== ======== ========= ======== ========
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK
DIVIDENDS............................. 1.4 1.6 --(c) 1.6 1.3
======== ======== ========= ======== ========
</TABLE>
(a) Represents amount of income before provision for income taxes required to
meet the preferred stock dividend requirements of the Company and its 50%
owned companies.
(b) 1994 results of operations are inadequate to cover fixed charges by
$288,090.
(c) 1994 results of operations are inadequate to cover combined fixed charges
and preferred stock dividends by $302,720.
<PAGE> 1
Exhibit 21
MASCOTECH, INC.
(A DELAWARE CORPORATION)
Subsidiaries as of March 15, 1997
<TABLE>
<CAPTION>
NAME JURISDICTION OF INCORPORATION OR ORGANIZATION
---- ---------------------------------------------
<S> <C>
Arrow Specialty Company Delaware
BLD Products, Ltd. Michigan
Novo Products, Inc. Florida
Hebco Products, Inc. Ohio
International Brake Industries, Inc. Delaware
Kendallville Foundry, Inc. Delaware
Longman Enterprises, Inc. Florida
Pylon Manufacturing Corp. Delaware
W.C. McCurdy Co. Michigan
Masco Industries International Sales, Inc. Barbados
MASG Disposition, Inc. Michigan
McGuane Industries, Inc. Delaware
MascoTech Coatings, Inc. Michigan
MascoTech Edison, Inc. New Jersey
MascoTech Europe, Inc. Delaware
MascoTech European Holdings, Inc. Delaware
Glo SpA Italy
MascoTech GmbH Germany
H&B Hyprotec Technology OHG Germany
Huber & Bauer GmbH 20% Germany
Holzer GmbH & Co. Germany
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
NAME JURISDICTION OF INCORPORATION OR ORGANIZATION
---- ---------------------------------------------
<S> <C>
Holzer Limited United Kingdom
Holzer Verwaltungs GmbH Germany
Neumeyer Fliesspressen GmbH Germany
MascoTech Forming Technologies - Fort Wayne, Inc. Delaware
MascoTech Holding Company Delaware
MascoTech Industrial Components, Inc. Delaware
Huron/St. Clair Manufacturing Company Delaware
MascoTech Services, Inc. Delaware
MascoTech Sintered Components, Inc. Delaware
MascoTech Tubular Products, Inc. Michigan
MASX Energy Services Group, Inc. Delaware
Mr. Bracket, Inc. Delaware
NI Industries, Inc. Delaware
NI Foreign Military Sales, Inc. Delaware
NI West, Inc. California
NI Wheel, Inc. Ontario
Norris Industries, Inc. California
Plastic Form, Inc. Delaware
</TABLE>
Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly-owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.
<PAGE> 3
TRIMAS CORPORATION
(A DELAWARE CORPORATION)
Subsidiaries as of March 15, 1997
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation or
Name Organization
---- ------------
<S> <C>
Beaumont Bolt & Gasket, Inc. Texas
Industrial Bolt & Gasket, Inc. Louisiana
Louisiana Bolt and Gasket, Inc. Louisiana
Compac Corporation Delaware
Netcong Investments, Inc. New Jersey
Di-Rite Company Ohio
Draw-Tite, Inc. Delaware
Mongo Electronics, Inc. Delaware
Draw-Tite (Canada) Ltd. Ontario
Eskay Screw Corporation Delaware
Fulton Performance Products, Inc. Delaware
Spar Marine Manufacturing Ltd. British Columbia
Heinrich Stolz GmbH & Co. KG Germany
Stolz USA, Inc. Texas
Hitch 'N Post, Inc. Delaware
Kee Services, Inc. Michigan
Keo Cutters, Inc. Delaware
Lake Erie Screw Corporation Ohio
Lamons Metal Gasket Co. Delaware
Canadian Gasket & Supply Inc. Canada
Louisiana Hose & Rubber Co. Louisiana
Monogram Aerospace Fasteners, Inc. Delaware
Norris Cylinder Company Delaware
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation or
Name Organization
---- ------------
<S> <C>
Punchcraft Company Michigan
Reese Products, Inc. Indiana
TriMas Corporation Pty. Ltd. Australia
Reese Products of Canada Ltd. Ontario
Reska Spline Products, Inc. Michigan
Richards Micro-Tool, Inc. Delaware
Rieke Corporation Indiana
Rieke Canada Limited Canada
Rieke of Mexico, Inc. Delaware
Rieke de Mexico, S.A. de C.V. Mexico
Rieke Leasing Co., Incorporated Delaware
TriMas Corporation Nevada
TriMas Corporation Limited United Kingdom
Englass Group Limited United Kingdom
Top Emballage France
TriMas Export, Inc. Barbados
TriMas Fasteners, Inc. Delaware
TriMas Services Corp. Delaware
</TABLE>
<PAGE> 1
EXHIBIT 23.A
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses included
in the registration statements of MascoTech, Inc. on Form S-3 (Registration Nos.
33-59222 and 33-55837) and Form S-8 (Registration Nos. 33-30735 and 33-42230) of
our report dated February 28, 1997, on our audits of the consolidated financial
statements and financial statement schedule of MascoTech, Inc. and subsidiaries
as of December 31, 1996 and 1995, and for each of the three years in the period
ended December 31, 1996, which report is included in this Annual Report on Form
10-K. We also consent to the reference to our Firm under the caption "Experts"
in such prospectuses.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
March 26, 1997
<PAGE> 1
EXHIBIT 23.B
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses included
in the registration statements of MascoTech, Inc. on Form S-3 (Registration Nos.
33-59222 and 33-55837) and on Form S-8 (Registration Nos. 33-30735 and 33-42230)
of our report dated February 11, 1997, on our audits of the consolidated
financial statements and financial statement schedule of TriMas Corporation and
subsidiaries as of December 31, 1996 and 1995, and for each of the three years
in the period ended December 31, 1996, which report is included in this Annual
Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
March 20, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM [identify
specific financial statements] AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 19,400
<SECURITIES> 37,760
<RECEIVABLES> 129,530
<ALLOWANCES> (2,000)
<INVENTORY> 69,640
<CURRENT-ASSETS> 393,970
<PP&E> 640,270
<DEPRECIATION> (251,810)
<TOTAL-ASSETS> 1,228,980
<CURRENT-LIABILITIES> 158,450
<BONDS> 752,400
0
10,800
<COMMON> 37,250
<OTHER-SE> 116,910
<TOTAL-LIABILITY-AND-EQUITY> 1,228,980
<SALES> 1,281,220
<TOTAL-REVENUES> 1,281,220
<CGS> 1,048,110
<TOTAL-COSTS> 1,048,110
<OTHER-EXPENSES> 31,520
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,970
<INCOME-PRETAX> 77,220
<INCOME-TAX> 37,300
<INCOME-CONTINUING> 39,920
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 11,700
<NET-INCOME> 51,620
<EPS-PRIMARY> .72
<EPS-DILUTED> .70
</TABLE>
